Consider the following transactions or events:

1. Sold merchandise on account.

2. Sold a used computer for cash.

3. Paid a supplier’s overdue account.

4. Recorded depreciation expense on a building.

5. Signed a mortgage and received cash.

6. Purchased inventory on account.

7. Gave a refund after hearing a customer’s complaint.

8. Received payment from a customer.

9. Sold shares of IBM stock for cash and recorded a gain.

10. Recorded a loss after discarding obsolete inventory.

11. Received a personal cash gift from a friend.

12. Made an “even”swap of a used truck for another truck.

13. Paid quarterly unemployment taxes.

14. Received a tax refund after sending duplicate checks to the IRS.

Required

a. Show the effects on cash of each transaction or event,using the format below:

Effects on Cash Increase Decrease No Change

b. Show the effects of each transaction or event on net income, using a similar format:

Effects on Net Income Increase Decrease No Change