Exercise 2-12A Supplies and the financial statements model LO 2-5 Pizza Express Inc. began the Year 2 accounting period with $2,500 cash, $1,400 of common stock, and $1,100 of retained earnings. Pizza Express was affected by the following accounting events during Year 2: 1. Purchased $3,600 of supplies on account. 2. Earned and collected $12,300 of cash revenue. 3. Paid $2,700 cash on accounts payable. 4. Adjusted the records to reflect the use of supplies. A physical count indicated that $250 of supplies was still on hand on December 31, Year 2. Required a. Show the effects of the events on the financial statements using a horizontal statements model given below. In the Cash Flows column, use OA to designate operating activity, IA for investing activity, FA for financing activity, NC for net change in cash and NA to indicate accounts not affected by the event. The beginning balances have been recorded as an example. (Enter any decreases to account balances and cash outflows with a minus sign.) PIZZA EXPRESS INC. Effect of Events on Financial Statements for Year 2 Assets = Event Cash Supplies = Liabilities + Accounts Payable Stockholders' Equity Income Statement + Common Stock + Retained Earnings Revenue - Expense = Net Income Statement of Cash Flows Beg. bal. 2,500 + = + 1,400 + 1,100 = NA 1. + + + 2. + + + 3. + + + 4. + + + Totals + + +