Consider the effects of the independent transactions, a through d, on a company’
ID: 2329556 • Letter: C
Question
Consider the effects of the independent transactions, a through d, on a company’s balance sheet, income statement, statement of cash flows, and statement of stockholders’ equity.
a. The company purchased inventory on credit.
b. The company paid cash for rent expense.
c. The company collected cash from clients previously billed for goods sold.
d. The company paid cash for inventory purchased in Transaction a.
Complete the table below to explain the effects and financial statement linkages. Use “+” to indicate the account increases and “–” to indicate the account decreases.
Cash
Balance Sheet A B C DCash
Noncash Assets Total Assets Total Liabilities Contributed Capital Retained Earnings Other Equity Statement of Cash flows Operating Cash flow Investing Cash flow Financing cash flow Income Statement Revenues Expenses Net Earnings Statement of Stockholders equity Contributed Capital Retained earningsExplanation / Answer
Answer
Balance sheet
A
B
C
D
Cash
Decrease
Increase
Decrease
Noncash assets
Increased (Inventory)
Decrease (Accounts receivables)
Total liabilities
Increased (Accounts payable)
Decreased (Accounts payable)
Contributed capital
Retained earnings
Decrease (Net Income)
Other equity
Statement of cash flows
Operating cash flow
Decrease
Increase
Decreased
Investing cash flow
Financing cash flow
Balance sheet
A
B
C
D
Cash
Decrease
Increase
Decrease
Noncash assets
Increased (Inventory)
Decrease (Accounts receivables)
Total liabilities
Increased (Accounts payable)
Decreased (Accounts payable)
Contributed capital
Retained earnings
Decrease (Net Income)
Other equity
Statement of cash flows
Operating cash flow
Decrease
Increase
Decreased
Investing cash flow
Financing cash flow