Exercise 2-13A (Algo) Supplies on financial statements LO 2-5, 2-8 Yard Professionals Incorporated experienced the following events in Year 1, its first year of operation: 1. Performed services for $24,000 cash. 2. Purchased $7,200 of supplies on account. 3. A physical count on December 31, Year 1, found that there was $1,310 of supplies on hand. Required a. Record the events in general ledger accounts under an accounting equation. b. Prepare an income statement, balance sheet, and statement of cash flows for the Year 1 accounting period. c. What is the balance in the Supplies account as of January 1, Year 2? d. What is the balance in the Supplies Expense account as of January 1, Year 2? Complete this question by entering your answers in the tabs below. Req A Req B Income Req B Balance Statement of Req C and D Statement Sheet Req B Cash Flows Prepare a statement of cash flows for the Year 1 accounting period. YARD PROFESSIONALS INCORPORTAED Statement of Cash Flows For the Year Ended December 31, Year 1 Cash flows from operating activities Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities Net change in cash Ending cash balance $ 0 0 $ 0

Analyzing the Accounts The controller for Summit Sales Inc. provides the following information on transactions that occurred during the year: a. Purchased supplies on credit, $18,600 b. Paid $14,800 cash toward the purchase in Transaction a c. Provided services to customers on credit1 $46,925 d. Collected $39,650 cash from accounts receivable e. Recorded depreciation expense, $8,175 f. Employee salaries accrued, $15,650 g. Paid $15,650 cash to employees for salaries earned h. Accrued interest expense on long-term debt, $1,950 i. Paid a total of $25,000 on long-term debt, which includes $1.950 interest from Transaction h j. Paid $2,220 cash for l years insurance coverage in advance k. Recognized insurance expense, $1,340, that was paid in a previous period l. Sold equipment with a book value of $7,500 for $7,500 cash m. Declared cash dividend, $12,000 n. Paid cash dividend declared in Transaction m o. Purchased new equipment for $28,300 cash. p. Issued common stock for $60,000 cash q. Used $10,700 of supplies to produce revenues Summit Sales uses the indirect method to prepare its statement of cash flows. Required: 1. Construct a table similar to the one shown at the top of the next page. Analyze each transaction and indicate its effect on the fundamental accounting equation. If the transaction increases a financial statement element, write the amount of the increase preceded by a plus sign (+) in the appropriate column. If the transaction decreases a financial statement element, write the amount of the decrease preceded by a minus sign (-) in the appropriate column. 2. Indicate whether each transaction results in a cash inflow or a cash outflow in the Effect on Cash Flows column. If the transaction has no effect on cash flow, then indicate this by placing none in the Effect on Cash Flows column. 3. For each transaction that affected cash flows, indicate whether the cash flow would be classified as a cash flow from operating activities, cash flow from investing activities, or cash flow from financing activities. If there is no effect on cash flows, indicate this as a non-cash activity.

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Accounts Payable Subsidiary Ledger The cash payments and purchases journal for Outdoor Artisan Landscaping follow. The accounts payable control account has a June 1, 20Y1, balance of $4,820, consisting of an amount owed to Augusta Sod Co. CASH PAYMENTS JOURNAL Page 31 Date Ck. No. Account Debited Post Ref. Other Accounts Dr. Accounts Payable Dr. Cash Cr. 20Y1             June 4 203 Augusta Sod Co. √   4,820   4,820   5 204 Utilities Expense 54 630     630   15 205 Home Centers Lumber Co. √   7,900   7,900   24 206 Nu Lawn Fertilizer √     1,400   1,400   30       630   14,120   14,750           (√)   (21)   (11)   PURCHASES JOURNAL Page 22 Date Account Credited Post Ref. Accounts Payable Cr. Landscaping Supplies Dr. Other Accounts Dr. Post Ref. Amount 20Y1               June 3 Home Centers Lumber Co. √ 7,900     7,900         7 Concrete Equipment Co. √ 3,660       Equipment 18 3,660 14 Nu Lawn Fertilizer √ 1,400     1,400         24 Augusta Sod Co.…