Applying Financial Statement Linkages to Understand Transactions Consider the effects of the independent transactions, a through g, on a company's balance sheet, income statement, and statement of cash flows. Complete the table below to explain the effects and financial statement linkages. Refer to Exhibit 2.10 as a guide for the linkages. a. Owners invested cash in the company in exchange for shares of common stock. b. The company received cash from the bank for a loan. c. The company purchased equipment to manufacture goods for sale and paid with cash. d. The company manufactured a custom piece of inventory and paid cash for materials and labor. The company sold the inventory for more than cost, and the customer promised to pay for the inventory in 30 days. e. The company paid monthly rent for a manufacturing space. f. The company paid cash dividends to the owners. g. The company received cash from the customer in transaction d. To indicate the account increases (+), enter "1" in the answer box. To indicate the account decreases (-), enter "2" in the answer box. Leave other answers boxes blank, if the account is not impacted by the transaction. a. b. c. d. e. f. g. Balance sheet Cash Noncash 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 income Statement of stockholders' equity Contributed capital Retained earnings

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Applying Financial Statement Linkages to Understand Transactions
Consider the effects of the independent transactions, a through g, on a company's balance sheet, income statement, and statement of cash flows. Complete the table below to explain the effects and financial statement linkages. Refer to Exhibit 2.10 as a guide for the linkages.
a. Owners invested cash in the company in exchange for shares of common stock.
b. The company received cash from the bank for a loan.
c. The company purchased equipment to manufacture goods for sale and paid with cash.
d. The company manufactured a custom piece of inventory and paid cash for materials and labor. The company sold the inventory for more than cost, and the customer promised to pay for the inventory in 30 days.
e. The company paid monthly rent for a manufacturing space.
f. The company paid cash dividends to the owners.
g. The company received cash from the customer in transaction d.

To indicate the account increases (+), enter "1" in the answer box.
To indicate the account decreases (-), enter "2" in the answer box.
Leave other answers boxes blank, if the account is not impacted by the transaction.

	a.	b.	c.	d.	e.	f.	g.
Balance sheet
Cash
Noncash 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 income
Statement of stockholders' equity
Contributed capital
Retained earnings

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