Answer:
See explanation section
Explanation:
Cash Net Income
a) Purchased $100 of supplies for cash -$100 No Effect
<em>Note: Purchasing supplies will reduce cash that is an asset and on the other hand, supplies is also an asset which will increase due to purchase. Therefore, no effect on net income.</em>
b) Recorded an adjusting entry to record No Effect -$20
use of $40 of the above supplies.
<em>Note: Using of supplies means supplies will reduce. That means asset will reduce. On the other hand, an expense, that is, supplies expense will increase that leads to the decrease on net income.</em>
c) Made sales of $1,300, all on account. No Effect $1,300
<em>Note: Sales on accounts will affect the net income directly but as the company does not receive cash, there is no effect on cash.</em>
d) Received $800 from customers in $800 No Effect
payment of their accounts
<em>Note: Receive cash will affect the cash, $800. As accounts receivable decreases, there is no effect on net income.</em>
e) Purchased equipment for cash, $2,500 -$2,500 No Effect
<em>Note: Purchasing equipment will reduce cash that is an asset and on the other hand, equipment is also an asset which will increase due to purchase. Therefore, no effect on net income.</em>
f) Recorded depreciation of building for No Effect -$600
period used, $600
<em>Note: Depreciation of building is an expense, therefore, net income will decrease. As depreciation expense is a non-cash account, no effect on cash.</em>
