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At the beginning of Year 1, Oak Consulting had the following normal balances in its accounts:

Account	Balance
Cash	$	29,200
Accounts receivable		16,400
Accounts payable		12,200
Common stock		20,200
Retained earnings		13,200

The following events apply to Oak Consulting for Year 1:

1. Provided $74,500 of services on account.
2. Incurred $3,000 of operating expenses on account.
3. Collected $50,000 of accounts receivable.
4. Paid $36,000 cash for salaries expense.
5. Paid $13,680 cash as a partial payment on accounts payable.
6. Paid a $8,600 cash dividend to the stockholders.

c. Show the beginning balances and the events in a horizontal statements model such as the following one: (In the Statement of Cash Flows column, use the initials "OA" for operating activities, "FA" for financing activities and "NC" for net change in cash. Select "NA" wherever required. Enter any decreases to account balance and cash outflows with a minus sign.)

OAK CONSULTING Effect of Transactions on the Financial Statements for Year 1 Balance Sheet Income Statement Statement of Cash Flows Assets = Liabilities + Stockholders' Equity Revenue – Expenses = Net Income No Cash + Accounts Receivable = Accounts Payable + Common Stock + Retained Earnings Bal. + = + + – = 1 + = + + – = 2 + = + + – = 3 + = + + – = 4 + = + + – = 5 + = + + – = 6 + = + + – = Bal. 0 + 0 = 0 + 0 + 0 0 – 0 = 0 0

Answer 1

c. Show the beginning balances and the events in a horizontal statements model such as the following one: (In the Statement of Cash Flows column, use the initials "OA" for operating activities, "FA" for financing activities and "NC" for net change in cash. Select "NA" wherever required. Enter any decreases to account balance and cash outflows with a minus sign.)

OAK CONSULTING Effect of Transactions on the Financial Statements for Year 1 Balance Sheet Income Statement Statement of Cash Flows Assets = Liabilities + Stockholders' Equity Revenue – Expenses = Net Income No Cash + Accounts Receivable = Accounts Payable + Common Stock + Retained Earnings Bal. 29200 + 16400 = 12200 + 20200 + 13200 – = 1 NA + 74500 = NA + NA + 74500 74500 – NA = 74500 NA 2 NA + NA = 3000 + NA + -3000 NA – 3000 = -3000 NA 3 50000 + -50000 = NA + NA + NA NA – NA = NA 50000 OA 4 -36000 + NA = NA + NA + -36000 NA – 36000 = -36000 -36000 OA 5 -13680 + NA = -13680 + NA + NA NA – NA = NA -13680 OA 6 -8600 + NA = NA + NA + -8600 NA – NA = NA -8600 FA Bal. 20920 + 40900 = 1520 + 20200 + 40100 74500 – 39000 = 35500 -8280 NC