Bridgeport Electronics experienced the following events during Year 1, its first year of operation: 1. Started the business when it acquired $96,000 cash from the issue of common stock. 2. Paid $81,000 cash to purchase inventory. 3. Sold merchandise inventory costing $33,000 for $61,000 cash. Record this transaction as two separate events (3a & 3b). 4. Physically counted inventory showing $41,400 inventory was on hand at the end of the accounting period. Required: Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. The first transaction is shown as an example. Note: In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, and NC for net change in cash. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require an input - leave cells blank if there is no corresponding input needed.
Bridgeport Electronics experienced the following events during Year 1, its first year of operation: 1. Started the business when it acquired $96,000 cash from the issue of common stock. 2. Paid $81,000 cash to purchase inventory. 3. Sold merchandise inventory costing $33,000 for $61,000 cash. Record this transaction as two separate events (3a & 3b). 4. Physically counted inventory showing $41,400 inventory was on hand at the end of the accounting period. Required: Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. The first transaction is shown as an example. Note: In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, and NC for net change in cash. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require an input - leave cells blank if there is no corresponding input needed.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Bridgeport Electronics experienced the following events during Year 1, its first year of operation:
1. Started the business when it acquired $96,000 cash from the issue of common stock.
2. Paid $81,000 cash to purchase inventory.
3. Sold merchandise inventory costing $33,000 for $61,000 cash. Record this transaction as two separate events (3a & 3b).
4. Physically counted inventory showing $41,400 inventory was on hand at the end of the accounting period.
Required:
Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of
cash flows. More specifically, record the amounts of the events into the model. The first transaction is shown as an example.
Note: In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, and NC
for net change in cash. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require an
input - leave cells blank if there is no corresponding input needed.
Event
Number
1.
2.
4.
Total
Assets
+ Inventory
Cash
96,000 +
+
96,000 +
Balance Sheet
= Liabilities + Stockholders' Equity
Accounts Common
Retained
Payable Stock Earnings
96,000 +
0 =
0
+
+
+
+
96.000 +
0
Income Statement
Revenue - Expenses
-
0
Net
Income
Statement of Cash
Flows
96,000 FA
0 96,000
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