1 Exercise 2-7A (Algo) Effect of accrued expenses on the accounting equation and financial statements LO 2-3, 2-4 2.5 points During Year 1, Chung Corporation earned $5,200 of cash revenue and accrued $3,700 of salaries expense. eBook Required Based on this information alone: (Hint: Record the events in accounts under an accounting equation before satisfying the requirements.) (Enter any decreases to account balances with a minus sign.) Hint Print References Event CHUNG CORPORATION Accounting Equation - Year 1 Assets Liabilities + Cash Salaries Payable 5,200 = + ol = 3,700| + 5,200 = 3,700 + Stockholders' Equity Common Retained Stock Earnings 5,200 Earned revenue Accrued salaries 0 + (3,700) 1,500 Ending balance + 2.5 points a. Prepare the December 31, Year 1, balance sheet. eBook Hint CHUNG CORPORATION Balance Sheet As of December 31, Year 1 Print Assets References Cash $ 5,200 S 5,200 Total assets Liabilities Salaries payable $ 3,700 S 3,700 Total liabilities Stockholders' Equity Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 1,500 1,500 S 5,200 eBOOK Hint Print References b. Determine the amount of net income that Chung would report on the Year 1 income statement. Net income $ 1,500 c. Determine the amount of net cash flow from operating activities that Chung would report on the Year 1 statement of cash flows. Net cash flow from operating activities $ 5,200