Effect of accounting events on the income statement and statement  of cash flowsRequiredEx...

Effect of accounting events on the income statement and statement  of cash flows

Required

Explain how each of the following events or series of events and any related adjusting entry will affect the amount of net income and the amount of cash flow from operating activities reported on the year-end financial statements. Identify the direction of change (increase, decrease, or NA) and the amount of the change. Organize your answers according to the following table. The first

event is recorded as an example. If an event does not have a related adjusting entry, record only the effects of the event.

a. Paid $6,000 cash on November 1 to purchase a one-year insurance policy.

b. Purchased $1,000 of supplies on account. Paid $700 cash on accounts payable. The ending balance in the Supplies account, after adjustment, was $100.

c. Provided services for $8,000 cash.

d. Collected $1,800 in advance for services to be performed in the future. The contract called for services to start on May 1 and to continue for one year.

e. Accrued salaries amounting to $3,200.

f. Sold land that cost $2,000 for $2,000 cash.

g. Acquired $20,000 cash from the issue of common stock.

h. Earned $8,000 of revenue on account. Collected $5,000 cash from accounts receivable.

i. Paid cash operating expenses of $3,000.