Purchased $ 1.500 of office supplies on account Accepted $36,000 on February 1,

Question

Purchased $ 1.500 of office supplies on account Accepted $36,000 on February 1, 3014. ee a retainer (or services to be performed evenly over the next 12 months Performed legal services (or cash of $84,000. Paid cash far salaries expense of $32,000. Paid a cash dividend to the stockholders of $8,000. Paid $1, 200 of the amount due on accounts payable. Determined that at the end of the accounting period, $150 of office supplies remained on hand. On December 31, 2014. recognized the revenue that had been earned for service performed in accordance with Transaction 2. Required Show the effects of the events on the financial statements using a horizontal statements model like the following one In the Cash Flow column, use the initials OA to designate operating activity. IA for investing activity, FA for financing activity. NC for not change In cash and NA to indicate accounts not affected by the event The first event has been recorded as en example (Do not round Intermediate calculations. Enter any decreases to account balances and cash outflows with a minus sign.)

Explanation / Answer

Financial Statement Effects Balance Sheet Income Statement Cash Non - Cash Assets Liabilities Contributed Earned Net Statement of Event Asset + Supplies = Accounts Payable Unearned Revenue Capital (+) Capital Revenues - Expenses (=) Income Cash flow 1 1,500 1,500 NC 2 36,000 36,000 36,000 OA 3 84,000 84,000 84,000 84,000 OA 4 -32000 32,000 -32000 -32000 OA 5 -8000 -8000 -8000 FA 6 -1200 -1200 -1200 OA 7 -1350 1350 -1350 NC 8 -33000 33000 33000 NC TOTALS $    78,800 150 300 3000 -8000 117000 33350 83650 78,800 NC = No change in cash

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