Identify how each of the following separate transactions affects financial statements. For the balance sheet, identify how each transaction affects total assets, total liabilities, and total equity. For the income statement, identify how each transaction affects net income. For the statement of cash flows, identify how each transaction affects cash flows from operating activities, cash flows from financing activities, and cash flows from investing activities. For increases, place a “ ” in the column or columns. For decreases, place a “ ” in the column or columns. If both an increase and a decrease occur, place a “ ”

in the column or columns. The first transaction is completed as an example.

Income Balance Sheet Statement Statement of Cash Flows Total Total Total Net Operating Financing Investing Transaction Assets Liab. Equity Income Activities Activities Activities 1 Owner invests cash for stock 2 Receives cash for services provided 3 Pays cash for employee wages 4 Incurs legal costs on credit 5 Borrows cash by signing long-term note payable 6 Pays cash dividend 7 Buys land by signing note payable 8 Provides services on credit 9 Buys office equipment for cash 10 Collects cash on receivable from (8)

Problem 1-3A Preparing an income statement