EFFECT OF TRANSACTIONS ON CASH FLOWS. The accompanying schedule Eo describes 17 transactions that characterize the activities of Summit Sales, Inc., for 19x7:

REQUIRED: 1. Indicate in the five asset, liability, and equity columns the effect of each transaction on the corresponding account. If the transaction increases an account corresponding to the column, write the amount of the increase preceded by a plus sign (+). If the transaction decreases an account corresponding to the column, write the amount of the decrease preceded by a minus sign (—). If the transaction increases one account and decreases another, with both accounts corresponding to the same column, then write the amounts of both effects preceded by the appropriate signs.

2. Indicate in the “Cash Flows” column the effect of each transaction on cash. If the event is an inflow of cash, write the word inflow and the amount of the inflow. If the transaction is an outflow of cash, write the word outflow and the amount of the outflow. ;
3. Prepare a statement of cash flows, using the direct method to determine cash flows from operations.

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TRANSACTION a) Purchased supplies on credit, $30,000 b) Paid $22,600 cash toward the $30,000 purchase in transaction a e) Provided services to customers on credit, $37,800 d) Collected $47,000 cash from accounts receivable e) Recorded depreciation expense, $7,350 f) Employees earned salaries, $9,200 g) Paid $9,200 cash to employees for salaries earned h) Recognized interest expense on long-term debt, $2,400 i) Paid $15,000 on long-term debt, including $2,400 interest from transaction h j) Paid $1,850 cash for 1 year's insurance coverage in advance k) Recognized insurance expense, $925 1) Sold old equipment with book value of $3,900 for $3,900 cash m) Declared cash dividend, $5,000 n) Paid cash dividend declared in transaction m o) Purchased new equipment, $14,300 cash p) Issued capital stock, $20,000 cash q) Used $28,100 of supplies to produce revenues EFFECTS ON ACCOUNTS ASSETS LIABILITIES AND EQUITY EFFECT CURRENT NON- CURRENT CURRENT LIABILITIES NON- CURRENT ON CASH LIABILITIES EQUITY FLOWS