Question

Paragraph Styles Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. You do not need to enter dollar amounts. (Note that "Not Affected" means that the event does not affect that element of the financial statements or the event causes an increase in that element that is offset by a decrease in the same element.) Increase=1 Decrease =D Not Affected=NA 7) In preparing the bank reconciliation for Heath Company, an employee found that the bank statement reported a bank service charge of $50. Stmt of Assets Liabilities Stk. Equity Revenues Expenses Net Income Cash Flows 8) In preparing the bank reconciliation for Heath Company, an employee discovered that the bank had collected one of the company's notes receivable in the amount of $20,000 and had deposited this amount in the company's account at the bank. This amount does not include interest Stmt of Assets Liabilities Stk. Equity Revenues Expenses Net Income Cash Flows 9) In preparing the bank reconciliation for Heath Company, an employee discovered an error. A $654 cash receipt for the collection of an account receivable was recorded in the company's books as S645. The deposit slip was correct, and the bank deposit had been correctly prepared The error appeared only in the company's accounting records. Stmt of Assets Liabilities Stk. Equity Revenues Expenses Net Income Cash Flows

financial statements

Answer 1

7.
Assets	Liabilities	Stk Equity	Revenues	Expenses	Net income	Stmt of cash flows
D		D		I	D	D
Each of the account would increase or decrease by $50.
Bank service charge is expense for business and thus expense would increase which would decrease net income and retained earnings which is part of stockholder's equity
Service charge deducted would decrease cash balance and thus assets and statement of cash flows, cash balance would decrease.
8.
Assets	Liabilities	Stk Equity	Revenues	Expenses	Net income	Stmt of cash flows
NA						I
Notes receivable collected would increase cash balance and decrease notes receivable balance. In this case the increase and decrease offset each other and thus is not affected.
Thus, assets both increase and decrease by $20,000.
9
Assets	Liabilities	Stk Equity	Revenues	Expenses	Net income	Stmt of cash flows
NA						I
The error is of $9, cash would increase by $9 and accounts receivable would decrease by $9. In this case the increase and decrease offset each other and thus is not affected.
Cash collected would increase cash balance is statement of cash flows