Question

Pizza Express Inc. began the Year 2 accounting period with $2,500 cash, $1,400 of common stock, and $1,100 of retained earnings. Pizza Express was affected by the following accounting events during Year 2:

1. Purchased $3,600 of supplies on account.
2. Earned and collected $12,300 of cash revenue.
3. Paid $2,700 cash on accounts payable.
4. Adjusted the records to reflect the use of supplies. A physical count indicated that $250 of supplies was still on hand on December 31, Year 2.

Required
a. Show the effects of the events on the financial statements using a horizontal statements model given below. In the Statement of Cash Flows column, use OA to designate operating activity, IA for investing activity, FA for financing activity, and NC for net change in cash. The beginning balances have been recorded as an example. (Enter any decreases to account balances with a minus sign. Not all cells in the "Statement of Cash Flows" column may require an input - leave cells blank if there is no corresponding input needed.)

Pizza Express Inc. began the Year 2 accounting period with $2,500 cash, $1,400 of common stock, and $1,100 of retained earnings Pizza Express was affected by the following accounting events during Year 2: 1. Purchased $3,600 of supplies on account. 2. Earned and collected $12,300 of cash revenue. 3. Paid $2,700 cash on accounts payable. 4. Adjusted the records to reflect the use of supplies. A physical count indicated that $250 of supplies was still on hand on December 31, Year 2. Required a. Show the effects of the events on the financial statements using a horizontal statements model given below. In the Statement of Cash Flows column, use OA to designate operating activity, IA for investing activity, FA for financing activity, and NC for net change in cash. The beginning balances have been recorded as an example. (Enter any decreases to account balances with a minus sign. Not all cells in the "Statement of Cash Flows" column may require an input - leave cells blank if there is no corresponding input needed.) Event Statement of Cash Flows Beg. bal. PIZZA EXPRESS INC. Effect of Events on Financial Statements for Year 2 Balance Sheet Income Statement Assets = Liabilities Stockholders' Equity Revenue - Expense = Net Income Accounts Cash Common Retained + Supplies = Payable * Stock * Earnings 2,500 + 1,400 + 1,100 3,600/= 3,600 12,300 + + 12,300 12,300 12,300 (2,700)| + (2,700) + (3,350) = 1 + (3,350) - 3,350 = (3,350) 12,100 + 250 = 1,400 + 10,050 12,300 - 3,350 = 8,950 2 12,300| OA ТОА 3. Totals 12,300

Answer 1

PIZZA EXPRESS INC. Effect of Events on Financial Statements for Year 2
	Balance Sheet									Income Statement					Statement of Cash Flows
Event	Assets			=	Liabilities	+	Stockholders' Equity			Revenue	-	Expense	=	Net income
	Cash	+	Supplies	=	Accounts Payable	+	Common Stock	+	Retained Earnings
Beg.Bal.	$2,500						$1,400		$1,100							NC
1			$3,600		$3,600											NC
2	12,300								12,300	12,300				12,300	12,300	OA
3	-2,700				-2,700										-2,700	OA
4			-3,350						-3,350			3,350		-3,350
Totals	$12,100	+	$250	=	$900	+	$1,400	+	$10,050	$12,300	-	$3,350	=	$8,950	$9,600	NC