Determining Financial Statement Effects of Various Transactions and Identifying Cash Flow Effects (P3-3)
Big Dog Holdings. Inc., is the parent company of Big Dog USA. a company that develops, markets, and retails a collection of consumer products centered around the signature BIG DOGS name. logo, and "Big Dog" characters. The following activities were inferred from a recent annual report.
a. Example: Incurred expenses: paid part in cash and part on credit.
b. Paid interest on long-term debt.
c. Sold merchandise to customers on account. (Hint Indicate the effects of the sale; then reduce inventory for the amount sold—two transactions.)
d. Sold investments for cash for more than their cost.
e. Collcctcd cash on account.
f. Used supplies.
g. Repaid long-term debt principal.
h. Received dividends and interest on investments.
i. Purchased equipment; paid part in cash and part on credit.
j. Paid cash on account.
k. Issued additional stock.
l. Paid rent to outlet mall owners.
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 N1 affects SE through Retained Earnings.) Write NE if there is no effect. The first transaction is provided as an example.
| BALANCE SHEET. | INCOME STATEMENT. | ||||
Transaction. | Assets. | Liabilities. | Stockholders' Equity. | Revenues. | Expenses. | Net Income. |
(a. (example) | - | + | - | NE | + | - |
2. For each transaction, indicate where, if at all. it would be reported on the statement of cash flows. Use O for operating activities. I for investing activities. F for financing activities, and NE if the transaction would not be included on the statement.
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