Answer:
Horizontal Statements Model
Balance Sheet Income Statement Statement of
Assets = Liabilities + Equity Revenue - Expenses = Profit Cash Flows
1. +$38,000)= 0 + $38,000 FA
2. +$14,200-$14,200 = L + E IA
3. +$23,400 = L + E +$23,400 - $23,400 OA
4. -$12,500 = L + E - $12,500 -12,500 OA
5. -$2,140 = L + E - $2,140 - 2,140 None
Total $46,760 = Liabilities + $38,000 + $8,760
Where A = assets
L = Liabilities
E = Equity
Explanation:
a) Data and Analysis:
Cash $38,000 Common stock $38,000
Cooktop $14,200 Cash $14,200
Cash $23,400 Sales revenue.
Cash $12,500 Salaries expense $12,500
Depreciation $2,140 ($14,200 - $3,500)/5
