Lucile Xi started a new outdoor clothing company in Year 1. The business experienced the following events during its first year of operation. Assume the new company uses the perpetual inventory system. 1. Acquired $90,000 cash from the issue of common stock. 2. Purchased clothing merchandise for $30,000 cash. 3. Sold clothing costing $20,000 for $45,000 cash. Record this transaction as two separate events (3a and 3b). 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. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA) The first transaction is shown as an example. Note: Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank if no input is needed. Balance Sheet Income Statement Event Number Assets Liabilities Accounts Blockholders' Equity Common Cash Inventory Payable Stock Retained Earnings Revenue Expenses Net Income Statement of Cash Flows 90,000 90,000+ 90,000 FA 2 3a • 36 Total NC Net change in cash NC
Lucile Xi started a new outdoor clothing company in Year 1. The business experienced the following events during its first year of operation. Assume the new company uses the perpetual inventory system. 1. Acquired $90,000 cash from the issue of common stock. 2. Purchased clothing merchandise for $30,000 cash. 3. Sold clothing costing $20,000 for $45,000 cash. Record this transaction as two separate events (3a and 3b). 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. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA) The first transaction is shown as an example. Note: Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank if no input is needed. Balance Sheet Income Statement Event Number Assets Liabilities Accounts Blockholders' Equity Common Cash Inventory Payable Stock Retained Earnings Revenue Expenses Net Income Statement of Cash Flows 90,000 90,000+ 90,000 FA 2 3a • 36 Total NC Net change in cash NC
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question

Transcribed Image Text:Lucile Xi started a new outdoor clothing company in Year 1. The business experienced the following events during its first year of
operation. Assume the new company uses the perpetual inventory system.
1. Acquired $90,000 cash from the issue of common stock.
2. Purchased clothing merchandise for $30,000 cash.
3. Sold clothing costing $20,000 for $45,000 cash. Record this transaction as two separate events (38 and 3b).
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. Also, in the Statement of Cash Flows column, classify
the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction is shown as an
example.
Note: Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank if no input is needed.
Balance Sheet
Income Statement
Event
Number
Assets
Liabilities
Accounts
Blockholders' Equity
Cash
Inventory
Payable
Common
Stock
Retained Revenue Expenses
Eamings
Net
Income
Statement of Cash
Flows
1
90,000
90.000+
90,000
FA
2
3a
36
Total
NC Net change in cash
NO
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