Applying Financial Statement Linkages to Understand Transactions Consider the effects of the independent transactions, a through h, on a company's balance sheet, income statement, and statement of cash flows. Complete the table below to explain the effects and financial statement linkages. Refer to Exhibit 2.10 as a guide for the linkages. a. Wages are earned by employees but not yet paid. b. Inventory is purchased on credit. c. Inventory purchased in transaction b is sold on credit (and for more than its cost). d. Collected cash from transaction c. e. Equipment is acquired for cash. f. Paid cash for inventory purchased in transaction b. g. Paid cash toward a note payable that came due. h. Paid cash for interest on borrowings. To indicate the account increases (+), enter "1" in the answer box. To indicate the account decreases (-), enter "2" in the answer box. If the account is not impacted by the transaction, leave the answer box blank.

	a.	b.	c.	d.	e.	f.	g.	h.
Balance sheet
Cash	Answer	Answer	Answer	Answer	Answer	Answer	Answer	Answer
Noncash assets	Answer	Answer	Answer	Answer	Answer	Answer	Answer	Answer
Total liabilities	Answer	Answer	Answer	Answer	Answer	Answer	Answer	Answer
Contributed capital	Answer	Answer	Answer	Answer	Answer	Answer	Answer	Answer
Retained earnings	Answer	Answer	Answer	Answer	Answer	Answer	Answer	Answer
Other equity	Answer	Answer	Answer	Answer	Answer	Answer	Answer	Answer
Statement of cash flows
Operating cash flow	Answer	Answer	Answer	Answer	Answer	Answer	Answer	Answer
Investing cash flow	Answer	Answer	Answer	Answer	Answer	Answer	Answer	Answer
Financing cash flow	Answer	Answer	Answer	Answer	Answer	Answer	Answer	Answer
Income statement
Revenues	Answer	Answer	Answer	Answer	Answer	Answer	Answer	Answer
Expenses	Answer	Answer	Answer	Answer	Answer	Answer	Answer	Answer
Net income	Answer	Answer	Answer	Answer	Answer	Answer	Answer	Answer
Statement of stockholders' equity
Contributed capital	Answer	Answer	Answer	Answer	Answer	Answer	Answer	Answer
Retained earnings	Answer	Answer	Answer	Answer	Answer	Answer	Answer	Answer