Sye Chase started and operated a small family architectural firm in Year 1. The firm was affected by two events: 

(1) Chase provided $25,000 of services on account,

(2) He purchased $2,800 of supplies on account. There were $250 of supplies on hand as of December 31, Year 1.

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. Show the preceding 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 a post-closing trial balance.

Transcribed Image Text:

Balance Sheet Income Statement Statement of Cash Assets = Llab. + Stk. Equlty Accts. Accts. Ret. Earn. Flows Rec. + Supplles Exp. Pay. + = Net Inc. Rev.