Pizza Express Inc. began the Year 2 accounting period with $7,500 cash, $4,500 of common stock, and $3,000 of retained earnings. Pizza Express was affected by the following accounting events during Year 2: Purchased $13,000 of supplies on account. Earned and collected $25,000 of cash revenue. Paid $11,500 cash on accounts payable. Adjusted the records to reflect the use of supplies. A physical count indicated that $2,900 of supplies was still on hand on December 31, Year 2.
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Pizza Express Inc. began the Year 2 accounting period with $7,500 cash, $4,500 of common stock, and $3,000 of
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Purchased $13,000 of supplies on account.
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Earned and collected $25,000 of cash revenue.
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Paid $11,500 cash on accounts payable.
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Adjusted the records to reflect the use of supplies. A physical count indicated that $2,900 of supplies was still on hand on December 31, Year 2.
a. Show the effects of the events on the financial statements using a horizontal statements model given below. In the
Cash flow statement represents the cash inflow and cash outflow of the company. It involves the transactions related to operaing, financing, and financing activities of the company.
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- 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.Holloway Company earned $4,300 of service revenue on account during Year 1. The company collected $3,655 cash from accounts receivable during Year 1. Based on this information alone, determine the following for Holloway Company. The balance of the accounts receivable that would be reported on the December 31, Year 1, balance sheet. The amount of net income that would be reported on the Year 1 income statement.Leach Inc. experienced the following events for the first two years of its operations: Year 1: Issued $10,000 of common stock for cash. Provided $70,000 of services on account. Provided $29,000 of services and received cash. Collected $41,000 cash from accounts receivable. Paid $22,000 of salaries expense for the year. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 7 percent of the ending accounts receivable balance will be uncollectible. Year 2: Wrote off an uncollectible account for $730. Provided $90,000 of services on account. Provided $25,000 of services and collected cash. Collected $72,000 cash from accounts receivable. Paid $22,000 of salaries expense for the year. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 7 percent of the ending accounts receivable balance will be uncollectible.
- Gibson Company engaged in the following transactions for Year 1. The beginning cash balance was $28,100 and the ending cash balance was $74,991. 1. Sales on account were $283,100. The beginning receivables balance was $94,700 and the ending balance was $77,000. 2. Salaries expense for the period was $55,460. The beginning salaries payable balance was $3,815 and the ending balance was $2,180. 3. Other operating expenses for the period were $120,170. The beginning other operating expenses payable balance was $4,860 and the ending balance was $9,181. 4. Recorded $19,330 of depreciation expense. The beginning and ending balances in the Accumulated Depreciation account were $14,340 and $33,670, respectively. 5. The Equipment account had beginning and ending balances of $211,970 and $238,570, respectively. There were no sales of equipment during the period. 6. The beginning and ending balances in the Notes Payable account were $48,500 and $150,500, respectively. There were no payoffs of…Holloway Company earned $6, 700 of service revenue on account during Year 1. The company collected $5, 695 cash from accounts receivable during Year 1. Required Based on this information alone, determine the following for Holloway Company. The balance of the accounts receivable that would be reported on the December 31, Year 1, balance sheet. The amount of net income that would be reported on the Year 1 income statement. The amount of net cash flow from operating activities that would be reported on the Year 1 statement of cash flows. The amount of retained earnings that would be reported on the Year 1 balance sheet. Event Earned revenue Collected accounts receivable Ending balance HOLLOWAY COMPANY Effect of Events on the Year 1 Accounting Equation Assets Liabilities + Cash + + + Accounts Receivable = C || || || + + + Stockholders' Equity Common Stock + + + Retained EarningsHolloway Company earned $6,200 of service revenue on account during Year 1. The company collected $5,270 cash from accounts recievable during Year 1. a. the balance of the accounts recievable that would be reported on the Decmeber 31,Year1,balance sheet b. the amount of net income that would be reported on the Year 1 income statement. c. the amount of net cash flow from operating activites that would be reported on the Year 1 statement of cash flows d. the amount of retained earnings that would be reported on the Year 1 balance sheet
- York Company engaged in the following transactions for Year 1. The beginning cash balance was $86,000 and the ending cash balance was $59,100. 1. Sales on account were $548,000. The beginning receivables balance was $128,000 and the ending balance was $90,000. 2. Salaries expense for the period was $232,000. The beginning salaries payable balance was $16,000 and the ending balance was $8,000. 3. Other operating expenses for the period were $236,000. The beginning other operating expenses payable balance was $16,000 and the ending balance was $10,000. 4. Recorded $30,000 of depreciation expense. The beginning and ending balances in the Accumulated Depreciation account were $12,000 and $42,000, respectively. 5. The Equipment account had beginning and ending balances of $44,000 and $56,000, respectively. There were no sales of equipment during the period. 6. The beginning and ending balances in the Notes Payable account were $36,000 and $44,000, respectively. There were no payoffs of…Sage Inc. experienced the following transactions for Year 1, its first year of operations: 1. Issued common stock for $90,000 cash. 2. Purchased $195,000 of merchandise on account. 3. Sold merchandise that cost $162,000 for $322,000 on account. 4. Collected $288,000 cash from accounts receivable. 5. Paid $175,000 on accounts payable. 6. Paid $64,000 of salaries expense for the year. 7. Paid other operating expenses of $80,000. 8. Sage adjusted the accounts using the following information from an accounts receivable aging schedule: Number of Days Past Due Current 0-30 31-60 61-90 Over 90 days Amount $20,400 8,500 1,700 1,700 1,700 Percent Likely to Be Uncollectible 0.01 0.05 0.10 0.20 0.50 Allowance Balance Required a. Organize the transaction data in accounts under an accounting equation. b. Prepare the income statement, statement of changes in stockholders' equity, balance sheet, and statement of cash flows for Sage Inc. for Year 1. c. What is the net realizable value of the accounts…During Year 1, Hardy Merchandising Company purchased $21,000 of inventory on account. Hardy sold inventory on account that cost $15,800 for $23,600. Cash payments on accounts payable were $13,100. There was $21,000 cash collected from accounts receivable. Hardy also paid $4,100 cash for operating expenses. Assume that Hardy started the accounting period with $18,500 in both cash and common stock. Required a. Record the events in a horizontal statement model. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, or NC for net change in cash. If the element is not affected by the event, leave the cell blank. b. What is the balance of accounts receivable at the end of Year 1? c. What is the balance of accounts payable at the end of Year 1? d. What are the amounts of gross margin and net income for Year 1? e. Determine the amount of net cash flow from operating activities. Complete this question by entering your answers in…
- Sage Incorporated experienced the following transactions for Year 1, its first year of operations: 1. Issued common stock for $100,000 cash. 2. Purchased $190,000 of merchandise on account. 3. Sold merchandise that cost $158,000 for $314,000 on account. 4. Collected $278,000 cash from accounts receivable. 5. Paid $170,000 on accounts payable. 6. Paid $64,000 of salaries expense for the year. 7. Paid other operating expenses of $80,000. 8. Sage adjusted the accounts using the following information from an accounts receivable aging schedule: Number of Days Past Due Amount Percent Likely to Be Uncollectible Allowance Balance Current $ 21,600 0.01 0-30 31-60 61-90 9,000 1,800 1,800 0.05 1,800 0.10 0.20 Over 90 days b. Prepare the income statement, statement of changes in stockholders' equity, balance sheet, and statement of cash flows for Sage Incorporated for Year 1. 0.50Sage Inc. experienced the following transactions for Year 1, its first year of operations: Issued common stock for $90,000 cash. Purchased $200,000 of merchandise on account. Sold merchandise that cost $156,000 for $310,000 on account. Collected $278,000 cash from accounts receivable. Paid $180,000 on accounts payable. Paid $52,000 of salaries expense for the year. Paid other operating expenses of $68,000. Sage adjusted the accounts using the following information from an accounts receivable aging schedule: Number of Days Past Due Amount Percent Likely to Be Uncollectible Allowance Balance Current $ 19,200 0.01 0–30 8,000 0.05 31–60 1,600 0.10 61–90 1,600 0.20 Over 90 days 1,600 0.50 Required Organize the transaction data in accounts under an accounting equation. Prepare the income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for Sage Inc. for Year 1. What is the net realizable…Holloway Company earned $9,400 of service revenue on account during Year 1. The company collected $7,990 cash from accounts receivable during Year 1. Required Based on this information alone, determine the following for Holloway Company. (Hint: Record the events in general ledger accounts under an accounting equation before satisfying the requirements.) a. The balance of the accounts receivable that would be reported on the December 31, Year 1, balance sheet. b. The amount of net income that would be reported on the Year 1 income statement. C. The amount of net cash flow from operating activities that would be reported on the Year 1 statement of cash flows. d. The amount of retained earnings that would be reported on the Year 1 balance sheet. Complete this question by entering your answers in the tabs below. Accounting Equation Reg A to D Based on this information alone, determine the following for Holloway Company. (Hint: Record the events in general ledger accounts under an…
