Home insert Design Univers Copy Format Painter Br Edmonds_JFAB_16.CHOZ, Working Papers (1) - Compatibility Mode - Saved - Gecer, lado Layout References Mailings Review ww Help 1 A A A A E E 7 AaB Col. AaBbc AaBbc AaBbcc AaBbc Bbc ab X, * A-D-A- E 12- - Emphasis T Heading 1 Heading 2 Heading 3 T Heading 4 T Headings Styles Paragraph Font LO 2-1, 2-2,2-3, 2-4 Exercise 2-9B Effect of accounts receivable and accounts payable transactions on financial statements The following events apply to Parker and Montes, a public accounting firm, for the Year I accounting period: 1. Performed $96,000 of services for clients on account. 2. Performed $65,000 of services for cash. 3. Incurred $45,000 of other operating expenses on account. 4. Paid $26,000 cash to an employee for salary. 5. Collected $70,000 cash from accounts receivable. 6. Paid $38,000 cash on accounts payable. 7. Paid a $10,000 cash dividend to the stockholders. 8. Accrued salaries were $3.000 at the end of Year 1. Required a. Show the effects of the events on the financial statements using a horizontal financial statements model like the following one. In the Statements of Cash Flows column, use OA to designate operating activity, IA for investment activity, FA for financing activity, and NC for not change in cash. Use NA to indicate the element is not affected by the event. The first event is recorded as an example. Balance Sheet Income Statement Statement of Cash Flows Event Assets Liabilities + Equity Accts. Cash + Rec. = Accts. Pay. + Sal. Pay. + Ret. Earn. NA + 96,000 - NA + NA + 96,000 Rev. - 96,000 - Exp. - Net Inc. NA = 96.000 NA Focus FG 1975 words e E L 2 0 W Tung here to search 2 Heading 3 T Heading 4 T Heading Paragraph Styles EXERCISE 2-9B (cont.) Parker and Moates Statements Model Year 1 Income Statement Rev. - Exp. Net Inc. Statement of Cash Flows Balance Sheet Assets Liabilities + Stk. Equity Accts. Acct. Sal. Retained Cash + Rec. Payable + Pay. + Earnings NA + 96,000 = NA + NA + 96,000 Event 96,000 - NA = 96,000 NA 7.000 + 3,000 + 77.000 161,000 - 74,000 Totals 61,000 + 26,000 = 87.000 61.000 NC D Focus to search I urat x x A-D-A- Emphasis T Heading 1 He Font Paragraph EXERCISE 2-9B (cont.) b. What is the amount of total assets at the end of Year 1? c. What is the balance of accounts receivable at the end of Year 1? d. What is the balance of accounts payable at the end of Year 1? e. What is the difference between accounts receivable and accounts payable? f. What is net income for Year 1? 5. What is the amount of net cash flow from operating activities for Year 1? . do earch Die L 9W Emphasis T Heading 1 Heading 2 THeady Paragraph Styles Exercise 2-10B Effect of accruals on the financial statements LO 2-2, 2-3, 24 Rosewood Inc. experienced the following events in Year 1, its first year of operation: 1. Received $50,000 cash from the issue of common stock. 2. Performed services on account for $67,000. 3. Paid a $5,000 cash dividend to the stockholders. 4. Collected $45,000 of the accounts receivable. 5. Paid $49.000 cash for other operating expenses. 6. Performed services for $10,000 cash. 7. Recognized $2,000 of accrued utilities expense at the end of the year. Required 1. Identify the events that result in revenue or expense recognition b. Based on your response to Requirement a, determine the amount of net income reported on the Year I income statement. c. Identify the events that affect the statement of cash flows. d. Based on your response to Requirements, determine the amount of cash flow from operating activities reported on the Year 1 statement of cash flows e. What is the balance of the Retained Earnings account that appears on the Year 1 balance sheet? a. & c. Event Revenue Expense Statement of Cash Flows - WON Computation of Net Income LO 2-2,2- Paragraph Exercise 2-10B Effect of accruals on the financial statements Rosewood Inc. experienced the following events in Your I. a first year of operation 1. Received $50,000 cash from the issue of common stock. 2. Performed services on account for $67,000. 3. Pald a $5,000 cash dividend to the stockholders 4. Collected $45,000 of the accounts receivable. 5. Paid $49.000 cash for other operating expenses. 6. Performed services for $10,000 cash. 7. Recognized $2,000 of accrued utilities expense at the end of the year. Required 1. Identify the events that result in revenue or expense recognition b. Based on your response to Requirement a, determine the amount of net income reported on the Year 1 income statement. c. Identify the events that affect the statement of cash flows. d. Based on your response to Requirements, determine the amount of cash flow from operating activities reported on the Year 1 statement of cash flows. e. What is the balance of the Retained Earnings account that appears on the Year I balance sheet? a. & G Event Revenue Expense Statement of Cash Flows NE Computation of Net Income A REAL A-EEEE AaBbCcl AaBBC AaBbcc AaB Emphasis T Heading 1 Heading 2 T Heac LO 2-2,2-3, 2-4 Paragraph Styles Exercise 2-11B Net Income w as changes in cesh In Year I Hall Inc. bilied its customers 562.000 for services performed. The company collected $51.000 of the amount billed. Hall incurred $39.000 of other operating expenses on account. Hall paid $31.000 of the accounts payable. Hall acquired $40,000 cash from the issue of common stock. The company invested $21.000 cash in the purchase of land. Required (Hot Identify the six events described in the paragraph and record them in general ledger accounts under an accounting equation before attempting to answer the questions.) Use the preceding informa tion to answer the following questions 1. What amount of revenue will be reported on the Year income statement? b. What amount of cash flow from revenue will be reported on the statement of cash flows! 6. What is the net income for the period? 4. What is the net cash flow from operating activities for the period? Hall, Inc. Effect of Events on the General Ledger Accounts E = Liabilities + Stockholders' Equity Accounts Accounts Com. Retained Cash Receivable Land = Payable + Stock + Earnings Event 1. Sales on Account 2. Coll. Accts. Rec. 3. Incurred Expense 4. Pd. Acc. Pay. 5. Issue of Stock 6. Purchase Land Totals 39,000 11.000 21.000 = 8,000 + 40,000 + 23,000 EXERCISE 2-11B (cont.) e. Why is the amount of net income different from the net cash flow from operating activities for the period? f. What is the amount of net cash flow from investing activities? g. What is the amount of net cash flow from financing activities? h. What amounts of total assets, liabilities, and equity will be reported on the year-end balance sheet