A Recording supplies and identifying their effect on financial statementsKim Perz started...

A Recording supplies and identifying their effect on financial statements

Kim Perz started and operated a small family consulting firm in 2011. The firm was affected by two events: (1) Perz provided $18,000 of services on account, and (2) she purchased $5,000 of supplies on account. There were $900 of supplies on hand as of December 31, 2011.

Required

a. Open T-accounts and record the two transactions in the accounts.

b. Record the required year-end adjusting entry to reflect the use of supplies.

c. Record the above transactions in a horizontal statements model like the following one.

d. Explain why the amounts of net income and net cash flow from operating activities differ.

e. Record and post the required closing entries, and prepare an after-closing trial balance.