Kim Perz started and operated a small family consulting firm in 2011. The firm was affected by two events: (1) Perz provided \(\$ 18,000\) of services on account, and (2) she purchased \(\$ 5,000\) of supplies on account. There were \(\$ 900\) of supplies on hand as of December 31, 2011.
Required

a. Open T-accounts and record the two transactions in the accounts.

b. Record the required year-end adjusting entry to reflect the use of supplies.

c. Record the above transactions in a horizontal statements model like the following one.

d. Explain why the amounts of net income and net cash flow from operating activities differ.

e. Record and post the required closing entries, and prepare an after-closing trial balance.

Transcribed Image Text:

Assets = Liab. + Equity Accts. Accts. Ret. Rec. + Supplies = Pay. + Earn. Rev. - Exp. = Net Inc. Cash Flow