Question

Identify how each of the following separate transactions 1 through 10 affects financial statements. For increases, place a "+" and the dollar amount in the column or columns. For decreases, place a "−" and the dollar amount in the column or columns. Some cells may contain both an increase (+) and a decrease (−) along with the dollar amounts. The first transaction is completed as an example.Required:a. For the balance sheet, identify how each transaction affects total assets, total liabilities, and total equity. For the income statement, identify how each transaction affects net income.b. For the statement of cash flows, identify how each transaction affects cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities.
Transaction 1 Owner invests $900 cash in business in exchange for stock+900 +900 +900 2 Receives $700 cash for services provided 3Pays $500 cash for employee wages 4 Incurs $100 legal costs on credit 5 Purchases $200 of supplies on credit 6Buys equipment for $300 cash 7 Pays $200 on accounts payable 8 Provides $400 services on credit 9 Pays $50 cash for dividends 10 Collects $400 cash on accounts receivable

Answer 1

Answer:

The detailed effect of each transaction of P&L, BS and cashflow statements are mentioned below;

Explanation:

2- Receives $700 cash for services provided: Income: +700, Total Assets: +700 and Operating Cash: +700

3- Pays $500 cash for employee wages: Income: -500, Total Assets: -500 and operating cash: -500

4- Incurs $100 legal costs on credit: Income: -100, Total liabilities: +100 and operating cash: +100

5- Purchases $200 of supplies on credit: Income: -200, total liabilities: -200 and operating cash: +200

6- Buys equipment for $300 cash: Income: -300, total assets: -300 and operating cash: -300

7- Pays $200 on accounts payable: Total liabilities: -200, operating cash: -200

8- Provides $400 services on credit: Income: +400, total liabilities: +400 and operating cash: +400

9- Pays $50 cash for dividends: Total Assets: -50 and financing cashflow: -50

10- Collects $400 cash on accounts receivable: total assets: +400, operating cash: +400