Hart, Attorney at Law, experlenced the following transactions In Year 1, the first year of operations: 1 Accepted $36.000 on April 1, Year 1, as a retalner for services to be performed evenly over the next 12 months. 2 Performed legal services for cash of $54,000. 3. Purchased $2,800 of office supples on account 4. Pald $2.400 of the amount due on accounts payable. 5. Pald a cash dividend to the stockholders of $5,000. 6. Pald cash for operating expenses of $31000. 7. Determined that at the end of the accounting perlod $200 of office supplies remalned on hand. B. On December 31, Year 1, recognized the revenue that had been earned for servlces performed In accordance with Transaction 1. Required Show the effects of the events on the financlal statements using the following hortzontal statements model. In the Cash Flows column, use OA to designate operating activity, FA for financing activity, IA for Investing activity, or NC for net change In cash. If the element Is not affected by the event, leave the cell blank. The first event has been recorded as an example. (Do not round Intermedlate calculations. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells will require entry.) HART, ATTORNEY AT LAW Effect of Transactions on the Financial Statements for Year 1 Balance Sheet Income Statement Stockholders Equity Statement of Cash Flow Assets Liabilities Retained Earnings Unearned Event No. Net Income + Supplies Accounts Revenue - Expense Cash %3D Payable Revenue 36,000|+ 36,000 + 36,000 OA %3D 1. %3D 2. %3D 3. %3D + 4. !! 5. + 8. %3D 7. %3D 8. %3D Totals
Hart, Attorney at Law, experlenced the following transactions In Year 1, the first year of operations: 1 Accepted $36.000 on April 1, Year 1, as a retalner for services to be performed evenly over the next 12 months. 2 Performed legal services for cash of $54,000. 3. Purchased $2,800 of office supples on account 4. Pald $2.400 of the amount due on accounts payable. 5. Pald a cash dividend to the stockholders of $5,000. 6. Pald cash for operating expenses of $31000. 7. Determined that at the end of the accounting perlod $200 of office supplies remalned on hand. B. On December 31, Year 1, recognized the revenue that had been earned for servlces performed In accordance with Transaction 1. Required Show the effects of the events on the financlal statements using the following hortzontal statements model. In the Cash Flows column, use OA to designate operating activity, FA for financing activity, IA for Investing activity, or NC for net change In cash. If the element Is not affected by the event, leave the cell blank. The first event has been recorded as an example. (Do not round Intermedlate calculations. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells will require entry.) HART, ATTORNEY AT LAW Effect of Transactions on the Financial Statements for Year 1 Balance Sheet Income Statement Stockholders Equity Statement of Cash Flow Assets Liabilities Retained Earnings Unearned Event No. Net Income + Supplies Accounts Revenue - Expense Cash %3D Payable Revenue 36,000|+ 36,000 + 36,000 OA %3D 1. %3D 2. %3D 3. %3D + 4. !! 5. + 8. %3D 7. %3D 8. %3D Totals
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The horizontal analysis model arranges the balance sheet, income statement, and cash flows elements horizontally in a table. It is used to spot trends in the financial data over the period.
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