Income Statement Effects Explain how each of the following individual transactions affects (increases, decreases, or does not affect) the amount of net income Southwest Company would report under generally accepted accounting principles; if income is unaffected, explain why:

a. Products are sold for $55,000.

b. The cost of materials used in producing the products sold is $25,000.

c. The cost of labor used to produce the products sold is

$12,000.

d. Cash collected on accounts receivable from the prior year is $15,000.

. Land costing $8,000 is purchased.

. Equipment with a carrying amount of $7,200 is sold for

$6,300.

. Property taxes amounting to $8,700 are paid.

. Dividends of $1,700 on investments in other companies are received, and dividends of $7,500 are paid by Southwest Company.