Answer:
Effects of Transactions on Cash and Net Income:
Cash Net Income
(a) Purchased $104 of supplies for cash. -$104 $0
(b) Recorded an adjusting entry to record use
of $40 of the above supplies. $0 -$40
(c) Made sales of $1,432, all on account. $0 $1,432
(d) Received $995 from customers in payment
of their accounts. $995 $0
(e) Purchased capital asset for cash, $2,635. -$2,635 $0
(f) Recorded depreciation of building for period
used, $710. $0 -$710
Explanation:
a) Data and Analysis:
a. Supplies $104 Cash $104
b. Supplies Expense $40 Supplies $40
c. Accounts receivable $1,432 Sales revenue $1,432
d. Cash $995 Accounts receivable $995
e. Capital asset $2,635 Cash $2,635
f. Depreciation Expense $710 Accumulated Depreciation $710
b) Only transactions that affect Cash have cash effects. Transactions that affect net income are either revenue or expenses. All other transactions that do not affect cash or net income are analyzed according to their basic effect on the accounting equation of assets = liabilities + equity.
