Answer only. ### Financial Accounting Exercise for Year 1: Lewis and Harper#### Given Events:The following events apply to Lewis and Harper, a public accounting firm, for the Year 1 accounting period:1. Performed $94,500 of services for clients on account.2. Performed $53,000 of services for cash.3. Incurred $54,000 of other operating expenses on account.4. Paid $21,500 cash to an employee for salary.5. Collected $67,000 cash from accounts receivable.6. Paid $37,000 cash on accounts payable.7. Paid an $8,000 cash dividend to the stockholders.8. Accrued salaries were $4,600 at the end of Year 1.#### Required:**a.** Show the effects of the events on the financial statements using a horizontal statements model like the following one. In the Cash Flow column, use OA to designate operating activity, IA for investing activity, FA for financing activity, NC for net change in cash, and NA to indicate the element is not affected by the event. The first event is shown as an example. Enter any decreases to account balances and cash outflows with a minus sign.**b.** What is the amount of total assets at the end of Year 1?**c.** What is the balance of accounts receivable at the end of Year 1?**d.** What is the balance of accounts payable at the end of Year 1?**e.** What is net income for Year 1?**f.** What is the amount of net cash flow from operating activities for Year 1?Complete this question by entering your answers in the tabs below. ### Explanation of the Horizontal Statements Model:This model allows us to see the impact of different transactions on the financial statements (balance sheet, income statement, and statement of cash flows) in a horizontal format. Here, we will analyze each event and categorize its effect on assets, liabilities, equity, revenue, expense, and cash flow activity.#### Sample Event Analysis (Event 1):- Event 1: Performed $94,500 of services for clients on account. - **Revenue:** Increase for $94,500 - **Accounts Receivable (Asset):** Increase for $94,500 - **Cash Flow Activity:** NA (No immediate cash impact)Each subsequent event can be analyzed similarly **Lewis and Harper: Financial Statements Model for Accounting Year 1**The following table represents a financial statements model for Lewis and Harper. It illustrates various financial aspects, including assets, liabilities, stockholders’ equity, the income statement, and the statement of cash flow.### Table: Financial Statements Model| Event No. | Assets | = | Liabilities | + | Stockholders' Equity | Income Statement | Statement of Cash Flow ||-----------|--------------------------|---|----------------------------|---|-----------------------------|------------------------|------------------------|| | Cash | + | Accounts Receivable | = | Accounts Payable | + | Salaries Payable | + | Retained Earnings | Revenue | - | Expense | = | Net Income | || 1 | | + | 94,500 | = | | + | | + | 94,500 | 94,500 | - | | = | 94,500 | NA || 2 | | + | | = | | + | | + | | | - | | = | | || 3 | | + | | = | | + | | + | | | - | | = | | || 4 | | + | | = | | + | | + | | | - | | = | | || 5 | | + | | = | | + | | + | | | - | | = | | || 6 | | + | | = | | + | | + | | | - | | = | | || 7 | | + | | = | | + | | + | | | - | | = | | || 8 | | + | | = | | + | | + | | | - | | = | | || **Totals**| 0 | + | 94,500 | = | 0 | + | 0 | + | 94,500 | 94,500 | - |

The question is based on the concept of the Accounting Equation. Accounting Equation : Total Assets…

The following events apply to Lewis and Harper, a public accounting firm, for the Year 1 accounting period: 1. Performed $94,500 of services for clients on account. 2. Performed $53,000 of services for cash. 3. Incurred $54,000 of other operating expenses on account. 4. Paid $21,500 cash to an employee for salary. 5. Collected $67,000 cash from accounts receivable. 6. Paid $37,000 cash on accounts payable. 7. Paid a $8,000 cash dividend to the stockholders. 8. Accrued salaries were $4,600 at the end of Year 1. Required a. Show the effects of the events on the financial statements using a horizontal statements model like the following one. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, NC for net change in cash and NA to indicate the element is not affected by the event. The first event is shown as an example. (Enter any decreases to account balances and cash outflows with a minus sign.) b. What is the amount of total assets at the end of Year 1? c. What is the balance of accounts receivable at the end of Year 1? d. What is the balance of accounts payable at the end of Year 1? f. What is net income for Year 1? g. What is the amount of net cash flow from operating activities for Year 1?

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q