Exercise 2-28A (Algo) Effect of accounting events on the income statement and statement of cash flows LO 2-1, 2-2, 2-5, 2-6, 2-7 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. (Not all cells will require entry. Do not round intermediate calculations.) a. Paid $2,200 cash on October 1 to purchase a one-year insurance policy. b. Purchased $1,250 of supplies on account. Paid $800 cash on accounts payable. The ending balance in the Supplies account, after adjustment, was $350. c. Provided services for $7,900 cash. d. Collected $10,800 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 $4,900. f. Sold land that cost $18,200 for $18,200 cash g. Acquired $47,000 cash from the issue of common stock. h. Earned $13,400 of revenue on account. Collected $12,060 cash from accounts receivable. 1. Paid cash for other operating expenses of $1,850. Net Income Event/ Adjustment Direction of Change Amount of Direction Answer is not complete. Cash Flows from Operating Activities Amount of Change Change of Change a Decrease $ 2,200 Adj Decrease 550 b Decrease Adj Decrease C Increase Increase g. Acquired $47,000 cash from the issue of common stock. h. Earned $13,400 of revenue on account. Collected $12,060 cash from accounts receivable. i. Paid cash for other operating expenses of $1,850. Net Income Event/ Adjustment Direction Amount Direction Answer is not complete. Cash Flows from Operating Activities Amount of of of Change Change Change of Change a. Decrease $ 2,200 Adj Decrease 550 b. Decrease Adj. Decrease C Increase Increase Adj d Increase Adj. Increase e. Adj Decrease f Adj g Adj h Increase Increase Adj Decrease Decrease Adj