Not secure l ezto.mheducation.com/hm.tpx Exercise Z-TA ETrect or accouning event
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Not secure l ezto.mheducation.com/hm.tpx Exercise Z-TA ETrect or accouning events on tne income statement and staten C Required How each of the following events or series of events and the 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 ch 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. (Do not round intermediate calculations and round your final answers to nearest whole dollar amount) ange (increase, decrease, or NA) and the amount of the change. a. Paid $2,000 cash on October 1 to purchase a one-year insurance policy b Purchased $1.300 of supplies on account Paid S800 cash on accounts payable. The ending balance in the Supplies account, after adjustment, was $250 c. Provided services for $8,000 cash. d Coledted 9 300 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 $3,700 f. Sold land that cost $17,400 for $17,400 cash g. Acquired $54,500 cash from the issue of common stock h. Earned $11,900 of revenue on account. Collected $10,710 cash from accounts receivable i. Paid cash for other operating expenses of $1.250 Cash Flows from Operating Activities Net Income Event Adjustment Direction of Amount of Direction of Amount of Change ll ChangeChange Change NA Decrease S 2000 Ad Decrease 500 NA Adj Adj AdjExplanation / Answer
Net Income
Cash Flows from Operating Activities
Event/Adjustment
Direction of Change
Amount of Change
Direction of Change
Amount of Change
a.
NA
Decrease
$2,000
Adj.
Decrease
$500
NA
b.
NA
Decrease
$800
Adj.
Decrease
$1,050
NA
c.
Increase
$8,000
Increase
$8,000
Adj.
NA
NA
d.
NA
Increase
$9,300
Adj.
Increase
$6,200
NA
e.
Decrease
$3,700
NA
Adj.
NA
NA
f.
NA
NA
Adj.
NA
NA
g.
NA
NA
h.
Increase
$11,900
Increase
$10,710
Adj.
NA
NA
i.
Decrease
$1,250
Decrease
$1,250
Adj.
NA
NA
adjustment for 1 year insurance policy purchased on Oct 1 –
insurance expense – 3 months = 2,000 x 3/12 = $500
Less: ending balance = $250
Supplies expense= 1,300 – 250 = $1,050
Cash paid to accounts payable = $800
Earned portion as on Dec 31 = 9,300 x 8/12 = $6,200
Salaries expense = $3,700
Also, since no gainor loss on sale, no adjustment to revenue account.
Cash flow from operations = $10,170
Net Income
Cash Flows from Operating Activities
Event/Adjustment
Direction of Change
Amount of Change
Direction of Change
Amount of Change
a.
NA
Decrease
$2,000
Adj.
Decrease
$500
NA
b.
NA
Decrease
$800
Adj.
Decrease
$1,050
NA
c.
Increase
$8,000
Increase
$8,000
Adj.
NA
NA
d.
NA
Increase
$9,300
Adj.
Increase
$6,200
NA
e.
Decrease
$3,700
NA
Adj.
NA
NA
f.
NA
NA
Adj.
NA
NA
g.
NA
NA
h.
Increase
$11,900
Increase
$10,710
Adj.
NA
NA
i.
Decrease
$1,250
Decrease
$1,250
Adj.
NA
NA
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