Exercise $2-8$B Supplies and the financial statements model

Copy Express Inc. began the Year $3$ accounting period with $$9,000$ cash, $$5,000$ of common stock, and

$$4,000$ of retained earnings. Copy Express was affected by the following accounting events during

Year $3$:

Purchased $$9\mathrm{.}500$ of supplies on account.

Earned and collected $$32,500$ of cash revenue.

Paid $$7,200$ cash on accounts payable.

Adjusted the records to reflect the use of supplies. A physical count indicated that $$1,700$ of sup$-$

plies was still on hand on December $31,$ Year $3.$

Required

a$.$ Show the effects of the events on the financial statements using a horizontal statements model

like the following one. In the Cash Flows column, use OA to designate operating activity, IA

for investing activity, FA for financing activity, and NC for net change in cash. Use NA to

indicate accounts not affected by the event. The beginning balances are entered in the follow$-$

ing example:

b$.$ Explain the difference between the amount of net income and amount of net cash flow from operat$-$

ing activities.