The controller for Summit Sales Inc. provides the following information on transactions that occurred during the year:

Question:

The controller for Summit Sales Inc. provides the following information on transactions that occurred during the year:
a. Purchased supplies on credit, $28,400
b. Paid $24,600 cash toward the purchase in transaction a
c. Provided services to customers on credit, $41,800
d. Collected $33,650 cash from accounts receivable
e. Recorded depreciation expense, $10,350
f. Employee salaries accrued, $16,200
g. Paid $16,200 cash to employees for salaries earned
h. Accrued interest expense on long-term debt, $1,400
i. Paid a total of $15,000 on long-term debt, which includes $1,400 interest from transaction h
j. Paid $1,850 cash for one year€™s insurance coverage in advance
k. Recognized insurance expense, $1,125, that was paid in a previous period
l. Sold equipment with a book value of $5,700 for $5,700 cash
m. Declared cash $10,000
n. Paid cash declared in transaction m
o. Purchased new equipment for $24,300 cash
p. Issued for $50,000 cash
q. Used $18,100 of supplies to produce revenues
Summit Sales uses the indirect method to prepare its statement of cash flows.

Required:
1. Construct a table similar to the one shown below. Analyze each transaction and indicate its effect on the fundamental accounting equation. If the transaction increases a financial statement element, write the amount of the increase preceded by a plus sign (+) in the appropriate column. If the transaction decreases a financial statement element, write the amount of the decrease preceded by a minus sign (€“) in the appropriate column.
2. Indicate whether each transaction results in a cash inflow or a cash outflow in the €˜€˜Effect on Cash Flows€™€™ column. If the transaction has no effect on cash flow, then indicate this by placing €˜€˜none€™€™ in the €˜€˜Effect on Cash Flows€™€™ column.
3. For each transaction that affected cash flows, indicate whether the cash flow would be classified as a cash flow from operating activities, a cash flow from investing activities, or a cash flow from financing activities. If there is no effect on cash flows, indicate this as a noncash activity.

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