Common Stock Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity NORTHWEST SALES Statement of Cash Flows For the Year Ended December 31, Year 1 Cash Flows from Operating Activities: Inflow from Customers Outflow for Inventory Outflow for Expenses Net Cash Flow for Operating Expenses Cash Flows from Investing Activities Cash Flows from Financing Activities: Inflow from Stock Issued Net Cash Flow from Financing Activities Net Change in Cash Plus: Beginning Cash Balance Ending Cash Balance Requirement b. NORTHWEST SALES Income Statement For the Year Ended Year 1 Sales Revenue Cost of Goods Sold Gross Margin Operating Expenses Credit Card Expense Selling and Administrative Expenses Uncollectible Accounts Expense Total Operating Expenses Net Income $ 280,300 Correct! NORTHWEST SALES Statement of Changes in Stockholders 'Equity For the Year Ended Year 1 Beginning Common Stock Plus: Stock Issued Ending Common Stock Beginning Retained Earnings Plus: Net Income Ending Retained Earnings Total Stockholders' Equity NORTHWEST SALES Balance Sheet As of December 31, Year 1 Assets Cash Accounts Receivable Less: Allowance for Doubtful Accounts Merchandise Inventory Total Assets $ 480,300 Correct! Liabilities Stockholders' Equity Requirement a. NORTHWEST SALES Effect of Transactions on Financial Statements Assets Liabilities Equity Revenue Expenses Net Income Cash Flows Event 2016 1 2 NA NA NA NA NA FA 3a 5 NORTHWEST SALES Transactions for Year 1: 1. Cash received from sale of stock. 2. Purchase merchandise for cash. 3a.Cash sales. 3b.Credit card sales (4% service fee). 3c. Sales on account. 3d Cost of Goods Sold 4. Collected receivables from credit card sales. 5. Collected accounts receivable. 6. Selling and administrative expenses. 7. A/R determined uncollectible. $ 200,000 $ $ 900,000 $ 520,000 $ 380,000 $ 300,000 $ $ 710,000 ? $ 210,000 $ 190,000 5%