Exercise 2-27A (Algo) Effect of accounting events on the income statement and statement of cash flows LO 2-8 Required Explain how each of the following events or series of events and the related adjusting entry will affect the amount of net income and the amount of cash flow from operating activities reported on the year-end financial statements. Identify the direction of change (increase or decrease) and the amount of the change. If there is no change, leave the cell blank. Organize your answers according to the following table. The first event is recorded as an example. If an event does not have a related adjusting entry, record only the effects of the event. (Do not round intermediate calculations. Not all cells require entry.) a. Paid $2,700 cash on October 1 to purchase a one-year insurance policy. b. Purchased $1,100 of supplies on account. Paid $850 cash on accounts payable. The ending balance in the Supplies account, after adjustment, was $300. c. Provided services for $7,800 cash. d. Collected $9,600 in advance for services to be performed in the future. The contract called for services to start on May 1 and to continue for one year. e. Accrued salaries amounting to $3,700. f. Sold land that cost $17,400 for $17,400 cash. g. Acquired $54,000 cash from the issue of common stock. h. Earned $13,100 of revenue on account. Collected $11,790 cash from accounts receivable. 1. Paid cash operating expenses of $1,050. 92 Net Income Ever Adjustment Direction of Change Amount of Direction of Answer is not complete. Cash Flows from Operating Activities Amount of Change Change Change a Decrease $ 2,700 Adj. Decrease 675 b. Decrease O 850-> Ad Decrease O 800 a Increase 7,800 Ad d. Adj Increase Increase 9,600 6,400 Adj. Decrease O 3,700 O f Ad Ad N Increase O 11,790 Ad L Deomase O 1,050 AG M W3 S E LLI 44 5 85 < Prev 9 of 9 Next > 6 R T Y D F G H X C < 27 C B N B