Determining Financial Statement Effects of Various Transactions and Identifying Cash Flow....

Determining Financial Statement Effects of Various Transactions and Identifying Cash Flow. Effects (AP3-3)

According to its annual report, Wendy's International serves "the best hamburgers in the business" and other fresh food including salads, chicken sandwiches, and baked potatoes in more than 6,600 restaurants worldwide. The company operates its own restaurants and sells franchises to others. The following activities were inferred from a recent annual report.

 a. Purchased food and paper products; paid part in cash and the rest on account.

 b. Purchased additional investments.

 c. Incurred restaurant operating costs in company-owned facilities; paid part in cash and the rest on account.

 d. Served food to customers for cash.

 e. Used food and paper products.

 f. Paid cash dividends.

 g. Sold franchises, receiving part in cash and the rest in notes due from franchisees.

 h. Paid interest on debt incurred and due during the period.

Required:

1. For each of the transactions, complete the tabulation, indicating the effect (+ for increase and - for decrease) of each transaction. (Remember that A = L + SE, R - E = NI, and NI affects SE through Retained Earnings.) Write NE if there is no effect. The first transaction is provided as an example.

2. W here, if at all. would each transaction be reported on the statement of cash flows? Use O for operating activities. 1 for investing activities. F for financing activities, and NE if the transaction would not be included on the statement.