Effect of transactions on the elements of financial statementsRequired
Identify each of the following independent transactions as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). Also explain how each event affects assets, liabilities, stockholders’ equity, net income, and cash flow by placing a + for increase, − for decrease, or NA for not affected under each of the categories. The first event is recorded as an example.
Event | Type of Event | Assets | Liabilities | Common Stock | Retained Earnings | Net Income | Cash Flow |
a | AE | +/− | NA | NA | NA | NA | + |
a.Collected cash from accounts receivable.
b.Recovered an uncollectible account that was previously written off.
c.Paid cash for land.
d.Paid cash for other operating expenses.
e.Sold merchandise at a price above cost. Accepted payment by credit card. The credit card company charges a service fee. The receipts have not yet been forwarded to the credit card company.
f.Sold land for cash at its cost.
g.Paid cash to satisfy salaries payable.
h.Submitted receipts to the credit card company (see e above) and collected cash.
i.Loaned Carl Maddox cash. The loan had a 5 percent interest rate and a one-year term to maturity.
j. Paid cash to creditors on accounts payable.
k. Accrued three months’ interest on the note receivable (see i above).
l. Provided services for cash.
m. Paid cash for salaries expense.
n. Provided services on account.
o. Wrote off an uncollectible account (use allowance method).
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