Question

Stacey's Piano Rebuilding Company has been operating for one year. At the start of the second year, its income statement accounts had zero balances and its balance sheet account balances were as follows: Cash Accounts receivable Supplies Equipment Land Building $ 8.500 42.500 2.550 11,600 9,500 35,800 Accounts payable Uneamed revenue Note payable long-term) Common stock Retained eamings Additional paid in capital $ 11,700 4,680 61.100 2650 8.200 22,060 a. Rebuilt and delivered five planos in January to customers who paid $23,200 in cash. b. Received a $1,020 deposit from a customer who wanted her plano rebuilt c. Rented a part of the building to a bicycle repair shop, received $1.270 for rent in January d. Received $9,300 from customers as payment on their accounts e. Received an electric and gas utility bill for 5610 to be paid in February 1. Ordered $1,380 in supplies. g. Paid $2,930 on account in January h Received from the home of Stacey Eddy, the major shareholder, a $1.940 tool (equipment) to use in the business in exchange for 100 shares of 31 par value stock Declared and paid a $2,620 dividend (reduce Retained Earnings and Cash). k. Received and paid cash for the supplies in 10 Required: For the transactions below, Identity the operating (O), Investing (), and financing (1) activities and the direction ( for increaso. - Roy decrease and NE for no elect) and amount of the fact Transaction Statement of Cash Flows Direction and Amount of Effect d

Answer 1

Income statement are prepared on accrual basis while

Cash Flow statement are prepared on Cash basis

a. Operating activities - increased by $23,200

b. Operating activities - decreased by $1,020

c. Operating activities - increased by $1,270

d. Operating activities - increased by $9,300

e. Operating activities - No effect

f. Operating activities - No effect

g. Operating activities - decreased by $2,930

h. Investing activities - No effect

i. Operating activities - decrease by $20,700

j. Financing activities - decrease by $2,620

k. Operating activities - decrease by $1,380