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 year’s 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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Answer 1

Textbook Question

Chapter 11, Problem 38E

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 year’s 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.

Chapter 11, Problem 38E, Analyzing the Accounts The controller for Summit Sales Inc. provides the following information on

Expert Solution

To determine

(a)

Concept introduction:

Cash flow statement shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. It is also known as statement of cash flows.

To construct:

A table and to indicate the effect of each transaction on the financial accounts in terms of cash inflow and cash outflow.

Answer to Problem 38E

The table is constructed providing the effect in the accounts due to each transaction by giving + and − to the values.

Explanation of Solution

Table showing the effect of each transaction on the financial accounts:

	Assets ($)		Liabilities and Equity ($)
Transactions	Current	Non-Current	Current	Non-Current	Equity
Purchased supplies on credit, $18,600	18,600		18,600
Paid $14,800 cash towards purchase in above	−14,800		−14,800
Provided services to customer on credit, $46,925	+46,925				+46,925
Collected $39,650 cash from account receivable	±39,650
Record Depreciation expense, $8,175	−8,175				−8,175
Employee salary accrued, $15,650			15,650		−15,650
Paid $15,650 cash to employees for salaries earned	−15,650		−15,650
Accrues Interest expense on long-term debt, $1,950			1,950		−1,950
Paid a total of $25,000 on long term debt, which includes $1,950 from above transaction	−25,000		−1,950	−23,050
Paid $2,220 cash for 1 year’s insurance coverage in advance	±2,220
Recognised insurance expense, $1,340, that was paid in a previous year	−1,340				−1,340
Sold equipment with a book value of $7,500 for $7,500 cash	7,500	−7,500
Declared cash dividend, $12,000			12,000		−12,000
Paid cash dividend declared in above	−12,000		−12,000
Purchased new equipment for $28,300 cash	−28,300	28,300
Issued common stock for $60,000 cash	60,000				60,000
Used $10,700 of supplies to produce revenues	−10,700				−10,700

Expert Solution

To determine

(b)

Concept introduction:

Cash flow statement shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. Itis also known as statement of cash flows.

To construct:

A table and indicate the effect of each transaction on the financial accounts in terms of cash inflow and cash outflow.

Answer to Problem 38E

The table is constructed providing the effect in the accounts due to each transaction in terms of cash inflow and cash outflow.

Explanation of Solution

Table showing the effect of each transaction on the financial accounts:

Transactions	Cash Flow ($)
Purchased supplies on credit, $18,600	None
Paid $14,800 cash towards purchase in above	14,800 Cash outflow
Provided services to customer on credit, $46,925	None
Collected $39,650 cash from account receivable	39,650 Cash inflow
Record Depreciation expense, $8,175	None
Employee salary accrued, $15,650	None
Paid $15,650 cash to employees for salaries earned	15,650 Cash outflow
Accrued Interest expense on long-term debt, $1,950	None
Paid a total of $25,000 on long term debt, which includes $1,950 from above transaction	25,000 Cash outflow
Paid $2,220 cash for 1 year’s insurance coverage in advance	2,220 Cash outflow
Recognised insurance expense, $1,340, that was paid in a previous year	None
Sold equipment with a book value of $7,500 for $7,500 cash	7,500 Cash inflow
Declared cash dividend, $12,000	None
Paid cash dividend declared in above	12,000 Cash outflow
Purchased new equipment for $28,300 cash	28,300 Cash outflow
Issued common stock for $60,000 cash	60,000 Cash inflow
Used $10,700 of supplies to produce revenues	None

Expert Solution

To determine

(c)

Concept introduction:

Cash flow statement shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. Itis also known as statement of cash flows.

To construct:

A table and indicate the effect of each transaction on the financial accounts in terms of cash inflow and cash outflow.

Answer to Problem 38E

The table is constructed providing the classification of each transaction on the financial accounts in terms of cash flow from operating, investing and financing activities.

Explanation of Solution

Table showing the classification of each transaction on the financial accounts:

Transactions	Classification
Purchased supplies on credit, $18,600	Non-cash activity
Paid $14,800 cash towards purchase in above	Operating activity
Provided services to customer on credit, $46,925	Non-cash activity
Collected $39,650 cash from account receivable	Operating activity
Record Depreciation expense, $8,175	Non-cash activity
Employee salary accrued, $15,650	Non-cash activity
Paid $15,650 cash to employees for salaries earned	Operating activity
Accrued Interest expense on long-term debt, $1,950	Non-cash activity
Paid a total of $25,000 on long term debt, which includes $1,950 from above transaction	Investing activity
Paid $2,220 cash for 1 year’s insurance coverage in advance	Operating activity
Recognised insurance expense, $1,340, that was paid in a previous year	Non-cash activity
Sold equipment with a book value of $7,500 for $7,500 cash	Investing activity
Declared cash dividend, $12,000	Non-cash activity
Paid cash dividend declared in above	Financing activity
Purchased new equipment for $28,300 cash	Investing activity
Issued common stock for $60,000 cash	Financing activity
Used $10,700 of supplies to produce revenues	Non-cash activity

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Soln

Answer 2

Textbook Question

Chapter 11, Problem 38E

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 year’s 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.

Chapter 11, Problem 38E, Analyzing the Accounts The controller for Summit Sales Inc. provides the following information on

Expert Solution

To determine

(a)

Concept introduction:

Cash flow statement shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. It is also known as statement of cash flows.

To construct:

A table and to indicate the effect of each transaction on the financial accounts in terms of cash inflow and cash outflow.

Answer to Problem 38E

The table is constructed providing the effect in the accounts due to each transaction by giving + and − to the values.

Explanation of Solution

Table showing the effect of each transaction on the financial accounts:

	Assets ($)		Liabilities and Equity ($)
Transactions	Current	Non-Current	Current	Non-Current	Equity
Purchased supplies on credit, $18,600	18,600		18,600
Paid $14,800 cash towards purchase in above	−14,800		−14,800
Provided services to customer on credit, $46,925	+46,925				+46,925
Collected $39,650 cash from account receivable	±39,650
Record Depreciation expense, $8,175	−8,175				−8,175
Employee salary accrued, $15,650			15,650		−15,650
Paid $15,650 cash to employees for salaries earned	−15,650		−15,650
Accrues Interest expense on long-term debt, $1,950			1,950		−1,950
Paid a total of $25,000 on long term debt, which includes $1,950 from above transaction	−25,000		−1,950	−23,050
Paid $2,220 cash for 1 year’s insurance coverage in advance	±2,220
Recognised insurance expense, $1,340, that was paid in a previous year	−1,340				−1,340
Sold equipment with a book value of $7,500 for $7,500 cash	7,500	−7,500
Declared cash dividend, $12,000			12,000		−12,000
Paid cash dividend declared in above	−12,000		−12,000
Purchased new equipment for $28,300 cash	−28,300	28,300
Issued common stock for $60,000 cash	60,000				60,000
Used $10,700 of supplies to produce revenues	−10,700				−10,700

Expert Solution

To determine

(b)

Concept introduction:

Cash flow statement shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. Itis also known as statement of cash flows.

To construct:

A table and indicate the effect of each transaction on the financial accounts in terms of cash inflow and cash outflow.

Answer to Problem 38E

The table is constructed providing the effect in the accounts due to each transaction in terms of cash inflow and cash outflow.

Explanation of Solution

Table showing the effect of each transaction on the financial accounts:

Transactions	Cash Flow ($)
Purchased supplies on credit, $18,600	None
Paid $14,800 cash towards purchase in above	14,800 Cash outflow
Provided services to customer on credit, $46,925	None
Collected $39,650 cash from account receivable	39,650 Cash inflow
Record Depreciation expense, $8,175	None
Employee salary accrued, $15,650	None
Paid $15,650 cash to employees for salaries earned	15,650 Cash outflow
Accrued Interest expense on long-term debt, $1,950	None
Paid a total of $25,000 on long term debt, which includes $1,950 from above transaction	25,000 Cash outflow
Paid $2,220 cash for 1 year’s insurance coverage in advance	2,220 Cash outflow
Recognised insurance expense, $1,340, that was paid in a previous year	None
Sold equipment with a book value of $7,500 for $7,500 cash	7,500 Cash inflow
Declared cash dividend, $12,000	None
Paid cash dividend declared in above	12,000 Cash outflow
Purchased new equipment for $28,300 cash	28,300 Cash outflow
Issued common stock for $60,000 cash	60,000 Cash inflow
Used $10,700 of supplies to produce revenues	None

Expert Solution

To determine

(c)

Concept introduction:

Cash flow statement shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. Itis also known as statement of cash flows.

To construct:

A table and indicate the effect of each transaction on the financial accounts in terms of cash inflow and cash outflow.

Answer to Problem 38E

The table is constructed providing the classification of each transaction on the financial accounts in terms of cash flow from operating, investing and financing activities.

Explanation of Solution

Table showing the classification of each transaction on the financial accounts:

Transactions	Classification
Purchased supplies on credit, $18,600	Non-cash activity
Paid $14,800 cash towards purchase in above	Operating activity
Provided services to customer on credit, $46,925	Non-cash activity
Collected $39,650 cash from account receivable	Operating activity
Record Depreciation expense, $8,175	Non-cash activity
Employee salary accrued, $15,650	Non-cash activity
Paid $15,650 cash to employees for salaries earned	Operating activity
Accrued Interest expense on long-term debt, $1,950	Non-cash activity
Paid a total of $25,000 on long term debt, which includes $1,950 from above transaction	Investing activity
Paid $2,220 cash for 1 year’s insurance coverage in advance	Operating activity
Recognised insurance expense, $1,340, that was paid in a previous year	Non-cash activity
Sold equipment with a book value of $7,500 for $7,500 cash	Investing activity
Declared cash dividend, $12,000	Non-cash activity
Paid cash dividend declared in above	Financing activity
Purchased new equipment for $28,300 cash	Investing activity
Issued common stock for $60,000 cash	Financing activity
Used $10,700 of supplies to produce revenues	Non-cash activity

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Answer 3

Textbook Question

Chapter 11, Problem 38E

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 year’s 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.

Chapter 11, Problem 38E, Analyzing the Accounts The controller for Summit Sales Inc. provides the following information on

Expert Solution

To determine

(a)

Concept introduction:

Cash flow statement shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. It is also known as statement of cash flows.

To construct:

A table and to indicate the effect of each transaction on the financial accounts in terms of cash inflow and cash outflow.

Answer to Problem 38E

The table is constructed providing the effect in the accounts due to each transaction by giving + and − to the values.

Explanation of Solution

Table showing the effect of each transaction on the financial accounts:

	Assets ($)		Liabilities and Equity ($)
Transactions	Current	Non-Current	Current	Non-Current	Equity
Purchased supplies on credit, $18,600	18,600		18,600
Paid $14,800 cash towards purchase in above	−14,800		−14,800
Provided services to customer on credit, $46,925	+46,925				+46,925
Collected $39,650 cash from account receivable	±39,650
Record Depreciation expense, $8,175	−8,175				−8,175
Employee salary accrued, $15,650			15,650		−15,650
Paid $15,650 cash to employees for salaries earned	−15,650		−15,650
Accrues Interest expense on long-term debt, $1,950			1,950		−1,950
Paid a total of $25,000 on long term debt, which includes $1,950 from above transaction	−25,000		−1,950	−23,050
Paid $2,220 cash for 1 year’s insurance coverage in advance	±2,220
Recognised insurance expense, $1,340, that was paid in a previous year	−1,340				−1,340
Sold equipment with a book value of $7,500 for $7,500 cash	7,500	−7,500
Declared cash dividend, $12,000			12,000		−12,000
Paid cash dividend declared in above	−12,000		−12,000
Purchased new equipment for $28,300 cash	−28,300	28,300
Issued common stock for $60,000 cash	60,000				60,000
Used $10,700 of supplies to produce revenues	−10,700				−10,700

Expert Solution

To determine

(b)

Concept introduction:

Cash flow statement shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. Itis also known as statement of cash flows.

To construct:

A table and indicate the effect of each transaction on the financial accounts in terms of cash inflow and cash outflow.

Answer to Problem 38E

The table is constructed providing the effect in the accounts due to each transaction in terms of cash inflow and cash outflow.

Explanation of Solution

Table showing the effect of each transaction on the financial accounts:

Transactions	Cash Flow ($)
Purchased supplies on credit, $18,600	None
Paid $14,800 cash towards purchase in above	14,800 Cash outflow
Provided services to customer on credit, $46,925	None
Collected $39,650 cash from account receivable	39,650 Cash inflow
Record Depreciation expense, $8,175	None
Employee salary accrued, $15,650	None
Paid $15,650 cash to employees for salaries earned	15,650 Cash outflow
Accrued Interest expense on long-term debt, $1,950	None
Paid a total of $25,000 on long term debt, which includes $1,950 from above transaction	25,000 Cash outflow
Paid $2,220 cash for 1 year’s insurance coverage in advance	2,220 Cash outflow
Recognised insurance expense, $1,340, that was paid in a previous year	None
Sold equipment with a book value of $7,500 for $7,500 cash	7,500 Cash inflow
Declared cash dividend, $12,000	None
Paid cash dividend declared in above	12,000 Cash outflow
Purchased new equipment for $28,300 cash	28,300 Cash outflow
Issued common stock for $60,000 cash	60,000 Cash inflow
Used $10,700 of supplies to produce revenues	None

Expert Solution

To determine

(c)

Concept introduction:

Cash flow statement shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. Itis also known as statement of cash flows.

To construct:

A table and indicate the effect of each transaction on the financial accounts in terms of cash inflow and cash outflow.

Answer to Problem 38E

The table is constructed providing the classification of each transaction on the financial accounts in terms of cash flow from operating, investing and financing activities.

Explanation of Solution

Table showing the classification of each transaction on the financial accounts:

Transactions	Classification
Purchased supplies on credit, $18,600	Non-cash activity
Paid $14,800 cash towards purchase in above	Operating activity
Provided services to customer on credit, $46,925	Non-cash activity
Collected $39,650 cash from account receivable	Operating activity
Record Depreciation expense, $8,175	Non-cash activity
Employee salary accrued, $15,650	Non-cash activity
Paid $15,650 cash to employees for salaries earned	Operating activity
Accrued Interest expense on long-term debt, $1,950	Non-cash activity
Paid a total of $25,000 on long term debt, which includes $1,950 from above transaction	Investing activity
Paid $2,220 cash for 1 year’s insurance coverage in advance	Operating activity
Recognised insurance expense, $1,340, that was paid in a previous year	Non-cash activity
Sold equipment with a book value of $7,500 for $7,500 cash	Investing activity
Declared cash dividend, $12,000	Non-cash activity
Paid cash dividend declared in above	Financing activity
Purchased new equipment for $28,300 cash	Investing activity
Issued common stock for $60,000 cash	Financing activity
Used $10,700 of supplies to produce revenues	Non-cash activity

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Answer 4

Textbook Question

Chapter 11, Problem 38E

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 year’s 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.

Chapter 11, Problem 38E, Analyzing the Accounts The controller for Summit Sales Inc. provides the following information on

Expert Solution

To determine

(a)

Concept introduction:

Cash flow statement shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. It is also known as statement of cash flows.

To construct:

A table and to indicate the effect of each transaction on the financial accounts in terms of cash inflow and cash outflow.

Answer to Problem 38E

The table is constructed providing the effect in the accounts due to each transaction by giving + and − to the values.

Explanation of Solution

Table showing the effect of each transaction on the financial accounts:

	Assets ($)		Liabilities and Equity ($)
Transactions	Current	Non-Current	Current	Non-Current	Equity
Purchased supplies on credit, $18,600	18,600		18,600
Paid $14,800 cash towards purchase in above	−14,800		−14,800
Provided services to customer on credit, $46,925	+46,925				+46,925
Collected $39,650 cash from account receivable	±39,650
Record Depreciation expense, $8,175	−8,175				−8,175
Employee salary accrued, $15,650			15,650		−15,650
Paid $15,650 cash to employees for salaries earned	−15,650		−15,650
Accrues Interest expense on long-term debt, $1,950			1,950		−1,950
Paid a total of $25,000 on long term debt, which includes $1,950 from above transaction	−25,000		−1,950	−23,050
Paid $2,220 cash for 1 year’s insurance coverage in advance	±2,220
Recognised insurance expense, $1,340, that was paid in a previous year	−1,340				−1,340
Sold equipment with a book value of $7,500 for $7,500 cash	7,500	−7,500
Declared cash dividend, $12,000			12,000		−12,000
Paid cash dividend declared in above	−12,000		−12,000
Purchased new equipment for $28,300 cash	−28,300	28,300
Issued common stock for $60,000 cash	60,000				60,000
Used $10,700 of supplies to produce revenues	−10,700				−10,700

Expert Solution

To determine

(b)

Concept introduction:

Cash flow statement shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. Itis also known as statement of cash flows.

To construct:

A table and indicate the effect of each transaction on the financial accounts in terms of cash inflow and cash outflow.

Answer to Problem 38E

The table is constructed providing the effect in the accounts due to each transaction in terms of cash inflow and cash outflow.

Explanation of Solution

Table showing the effect of each transaction on the financial accounts:

Transactions	Cash Flow ($)
Purchased supplies on credit, $18,600	None
Paid $14,800 cash towards purchase in above	14,800 Cash outflow
Provided services to customer on credit, $46,925	None
Collected $39,650 cash from account receivable	39,650 Cash inflow
Record Depreciation expense, $8,175	None
Employee salary accrued, $15,650	None
Paid $15,650 cash to employees for salaries earned	15,650 Cash outflow
Accrued Interest expense on long-term debt, $1,950	None
Paid a total of $25,000 on long term debt, which includes $1,950 from above transaction	25,000 Cash outflow
Paid $2,220 cash for 1 year’s insurance coverage in advance	2,220 Cash outflow
Recognised insurance expense, $1,340, that was paid in a previous year	None
Sold equipment with a book value of $7,500 for $7,500 cash	7,500 Cash inflow
Declared cash dividend, $12,000	None
Paid cash dividend declared in above	12,000 Cash outflow
Purchased new equipment for $28,300 cash	28,300 Cash outflow
Issued common stock for $60,000 cash	60,000 Cash inflow
Used $10,700 of supplies to produce revenues	None

Expert Solution

To determine

(c)

Concept introduction:

Cash flow statement shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. Itis also known as statement of cash flows.

To construct:

A table and indicate the effect of each transaction on the financial accounts in terms of cash inflow and cash outflow.

Answer to Problem 38E

The table is constructed providing the classification of each transaction on the financial accounts in terms of cash flow from operating, investing and financing activities.

Explanation of Solution

Table showing the classification of each transaction on the financial accounts:

Transactions	Classification
Purchased supplies on credit, $18,600	Non-cash activity
Paid $14,800 cash towards purchase in above	Operating activity
Provided services to customer on credit, $46,925	Non-cash activity
Collected $39,650 cash from account receivable	Operating activity
Record Depreciation expense, $8,175	Non-cash activity
Employee salary accrued, $15,650	Non-cash activity
Paid $15,650 cash to employees for salaries earned	Operating activity
Accrued Interest expense on long-term debt, $1,950	Non-cash activity
Paid a total of $25,000 on long term debt, which includes $1,950 from above transaction	Investing activity
Paid $2,220 cash for 1 year’s insurance coverage in advance	Operating activity
Recognised insurance expense, $1,340, that was paid in a previous year	Non-cash activity
Sold equipment with a book value of $7,500 for $7,500 cash	Investing activity
Declared cash dividend, $12,000	Non-cash activity
Paid cash dividend declared in above	Financing activity
Purchased new equipment for $28,300 cash	Investing activity
Issued common stock for $60,000 cash	Financing activity
Used $10,700 of supplies to produce revenues	Non-cash activity

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Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution

To determine

(a)

Concept introduction:

Cash flow statement shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. It is also known as statement of cash flows.

To construct:

A table and to indicate the effect of each transaction on the financial accounts in terms of cash inflow and cash outflow.

Answer to Problem 38E

The table is constructed providing the effect in the accounts due to each transaction by giving + and − to the values.

Explanation of Solution

Table showing the effect of each transaction on the financial accounts:

	Assets ($)		Liabilities and Equity ($)
Transactions	Current	Non-Current	Current	Non-Current	Equity
Purchased supplies on credit, $18,600	18,600		18,600
Paid $14,800 cash towards purchase in above	−14,800		−14,800
Provided services to customer on credit, $46,925	+46,925				+46,925
Collected $39,650 cash from account receivable	±39,650
Record Depreciation expense, $8,175	−8,175				−8,175
Employee salary accrued, $15,650			15,650		−15,650
Paid $15,650 cash to employees for salaries earned	−15,650		−15,650
Accrues Interest expense on long-term debt, $1,950			1,950		−1,950
Paid a total of $25,000 on long term debt, which includes $1,950 from above transaction	−25,000		−1,950	−23,050
Paid $2,220 cash for 1 year’s insurance coverage in advance	±2,220
Recognised insurance expense, $1,340, that was paid in a previous year	−1,340				−1,340
Sold equipment with a book value of $7,500 for $7,500 cash	7,500	−7,500
Declared cash dividend, $12,000			12,000		−12,000
Paid cash dividend declared in above	−12,000		−12,000
Purchased new equipment for $28,300 cash	−28,300	28,300
Issued common stock for $60,000 cash	60,000				60,000
Used $10,700 of supplies to produce revenues	−10,700				−10,700

Expert Solution

To determine

(b)

Concept introduction:

Cash flow statement shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. Itis also known as statement of cash flows.

To construct:

A table and indicate the effect of each transaction on the financial accounts in terms of cash inflow and cash outflow.

Answer to Problem 38E

The table is constructed providing the effect in the accounts due to each transaction in terms of cash inflow and cash outflow.

Explanation of Solution

Table showing the effect of each transaction on the financial accounts:

Transactions	Cash Flow ($)
Purchased supplies on credit, $18,600	None
Paid $14,800 cash towards purchase in above	14,800 Cash outflow
Provided services to customer on credit, $46,925	None
Collected $39,650 cash from account receivable	39,650 Cash inflow
Record Depreciation expense, $8,175	None
Employee salary accrued, $15,650	None
Paid $15,650 cash to employees for salaries earned	15,650 Cash outflow
Accrued Interest expense on long-term debt, $1,950	None
Paid a total of $25,000 on long term debt, which includes $1,950 from above transaction	25,000 Cash outflow
Paid $2,220 cash for 1 year’s insurance coverage in advance	2,220 Cash outflow
Recognised insurance expense, $1,340, that was paid in a previous year	None
Sold equipment with a book value of $7,500 for $7,500 cash	7,500 Cash inflow
Declared cash dividend, $12,000	None
Paid cash dividend declared in above	12,000 Cash outflow
Purchased new equipment for $28,300 cash	28,300 Cash outflow
Issued common stock for $60,000 cash	60,000 Cash inflow
Used $10,700 of supplies to produce revenues	None

Expert Solution

To determine

(c)

Concept introduction:

Cash flow statement shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. Itis also known as statement of cash flows.

To construct:

A table and indicate the effect of each transaction on the financial accounts in terms of cash inflow and cash outflow.

Answer to Problem 38E

The table is constructed providing the classification of each transaction on the financial accounts in terms of cash flow from operating, investing and financing activities.

Explanation of Solution

Table showing the classification of each transaction on the financial accounts:

Transactions	Classification
Purchased supplies on credit, $18,600	Non-cash activity
Paid $14,800 cash towards purchase in above	Operating activity
Provided services to customer on credit, $46,925	Non-cash activity
Collected $39,650 cash from account receivable	Operating activity
Record Depreciation expense, $8,175	Non-cash activity
Employee salary accrued, $15,650	Non-cash activity
Paid $15,650 cash to employees for salaries earned	Operating activity
Accrued Interest expense on long-term debt, $1,950	Non-cash activity
Paid a total of $25,000 on long term debt, which includes $1,950 from above transaction	Investing activity
Paid $2,220 cash for 1 year’s insurance coverage in advance	Operating activity
Recognised insurance expense, $1,340, that was paid in a previous year	Non-cash activity
Sold equipment with a book value of $7,500 for $7,500 cash	Investing activity
Declared cash dividend, $12,000	Non-cash activity
Paid cash dividend declared in above	Financing activity
Purchased new equipment for $28,300 cash	Investing activity
Issued common stock for $60,000 cash	Financing activity
Used $10,700 of supplies to produce revenues	Non-cash activity

Answer 8

Expert Solution

To determine

(a)

Concept introduction:

Cash flow statement shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. It is also known as statement of cash flows.

To construct:

A table and to indicate the effect of each transaction on the financial accounts in terms of cash inflow and cash outflow.

Answer to Problem 38E

The table is constructed providing the effect in the accounts due to each transaction by giving + and − to the values.

Explanation of Solution

Table showing the effect of each transaction on the financial accounts:

	Assets ($)		Liabilities and Equity ($)
Transactions	Current	Non-Current	Current	Non-Current	Equity
Purchased supplies on credit, $18,600	18,600		18,600
Paid $14,800 cash towards purchase in above	−14,800		−14,800
Provided services to customer on credit, $46,925	+46,925				+46,925
Collected $39,650 cash from account receivable	±39,650
Record Depreciation expense, $8,175	−8,175				−8,175
Employee salary accrued, $15,650			15,650		−15,650
Paid $15,650 cash to employees for salaries earned	−15,650		−15,650
Accrues Interest expense on long-term debt, $1,950			1,950		−1,950
Paid a total of $25,000 on long term debt, which includes $1,950 from above transaction	−25,000		−1,950	−23,050
Paid $2,220 cash for 1 year’s insurance coverage in advance	±2,220
Recognised insurance expense, $1,340, that was paid in a previous year	−1,340				−1,340
Sold equipment with a book value of $7,500 for $7,500 cash	7,500	−7,500
Declared cash dividend, $12,000			12,000		−12,000
Paid cash dividend declared in above	−12,000		−12,000
Purchased new equipment for $28,300 cash	−28,300	28,300
Issued common stock for $60,000 cash	60,000				60,000
Used $10,700 of supplies to produce revenues	−10,700				−10,700

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

To determine

(a)

Concept introduction:

Cash flow statement shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. It is also known as statement of cash flows.

To construct:

A table and to indicate the effect of each transaction on the financial accounts in terms of cash inflow and cash outflow.

Answer 13

Answer to Problem 38E

The table is constructed providing the effect in the accounts due to each transaction by giving + and − to the values.

Answer 14

Explanation of Solution

Table showing the effect of each transaction on the financial accounts:

	Assets ($)		Liabilities and Equity ($)
Transactions	Current	Non-Current	Current	Non-Current	Equity
Purchased supplies on credit, $18,600	18,600		18,600
Paid $14,800 cash towards purchase in above	−14,800		−14,800
Provided services to customer on credit, $46,925	+46,925				+46,925
Collected $39,650 cash from account receivable	±39,650
Record Depreciation expense, $8,175	−8,175				−8,175
Employee salary accrued, $15,650			15,650		−15,650
Paid $15,650 cash to employees for salaries earned	−15,650		−15,650
Accrues Interest expense on long-term debt, $1,950			1,950		−1,950
Paid a total of $25,000 on long term debt, which includes $1,950 from above transaction	−25,000		−1,950	−23,050
Paid $2,220 cash for 1 year’s insurance coverage in advance	±2,220
Recognised insurance expense, $1,340, that was paid in a previous year	−1,340				−1,340
Sold equipment with a book value of $7,500 for $7,500 cash	7,500	−7,500
Declared cash dividend, $12,000			12,000		−12,000
Paid cash dividend declared in above	−12,000		−12,000
Purchased new equipment for $28,300 cash	−28,300	28,300
Issued common stock for $60,000 cash	60,000				60,000
Used $10,700 of supplies to produce revenues	−10,700				−10,700

Answer 15

Expert Solution

To determine

(b)

Concept introduction:

Cash flow statement shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. Itis also known as statement of cash flows.

To construct:

A table and indicate the effect of each transaction on the financial accounts in terms of cash inflow and cash outflow.

Answer to Problem 38E

The table is constructed providing the effect in the accounts due to each transaction in terms of cash inflow and cash outflow.

Explanation of Solution

Table showing the effect of each transaction on the financial accounts:

Transactions	Cash Flow ($)
Purchased supplies on credit, $18,600	None
Paid $14,800 cash towards purchase in above	14,800 Cash outflow
Provided services to customer on credit, $46,925	None
Collected $39,650 cash from account receivable	39,650 Cash inflow
Record Depreciation expense, $8,175	None
Employee salary accrued, $15,650	None
Paid $15,650 cash to employees for salaries earned	15,650 Cash outflow
Accrued Interest expense on long-term debt, $1,950	None
Paid a total of $25,000 on long term debt, which includes $1,950 from above transaction	25,000 Cash outflow
Paid $2,220 cash for 1 year’s insurance coverage in advance	2,220 Cash outflow
Recognised insurance expense, $1,340, that was paid in a previous year	None
Sold equipment with a book value of $7,500 for $7,500 cash	7,500 Cash inflow
Declared cash dividend, $12,000	None
Paid cash dividend declared in above	12,000 Cash outflow
Purchased new equipment for $28,300 cash	28,300 Cash outflow
Issued common stock for $60,000 cash	60,000 Cash inflow
Used $10,700 of supplies to produce revenues	None

Answer 16

Expert Solution

Answer 17

Expert Solution

Answer 18

Expert Solution

Answer 19

To determine

(b)

Concept introduction:

Cash flow statement shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. Itis also known as statement of cash flows.

To construct:

A table and indicate the effect of each transaction on the financial accounts in terms of cash inflow and cash outflow.

Answer 20

Answer to Problem 38E

The table is constructed providing the effect in the accounts due to each transaction in terms of cash inflow and cash outflow.

Answer 21

Explanation of Solution

Table showing the effect of each transaction on the financial accounts:

Transactions	Cash Flow ($)
Purchased supplies on credit, $18,600	None
Paid $14,800 cash towards purchase in above	14,800 Cash outflow
Provided services to customer on credit, $46,925	None
Collected $39,650 cash from account receivable	39,650 Cash inflow
Record Depreciation expense, $8,175	None
Employee salary accrued, $15,650	None
Paid $15,650 cash to employees for salaries earned	15,650 Cash outflow
Accrued Interest expense on long-term debt, $1,950	None
Paid a total of $25,000 on long term debt, which includes $1,950 from above transaction	25,000 Cash outflow
Paid $2,220 cash for 1 year’s insurance coverage in advance	2,220 Cash outflow
Recognised insurance expense, $1,340, that was paid in a previous year	None
Sold equipment with a book value of $7,500 for $7,500 cash	7,500 Cash inflow
Declared cash dividend, $12,000	None
Paid cash dividend declared in above	12,000 Cash outflow
Purchased new equipment for $28,300 cash	28,300 Cash outflow
Issued common stock for $60,000 cash	60,000 Cash inflow
Used $10,700 of supplies to produce revenues	None

Answer 22

Expert Solution

To determine

(c)

Concept introduction:

Cash flow statement shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. Itis also known as statement of cash flows.

To construct:

A table and indicate the effect of each transaction on the financial accounts in terms of cash inflow and cash outflow.

Answer to Problem 38E

The table is constructed providing the classification of each transaction on the financial accounts in terms of cash flow from operating, investing and financing activities.

Explanation of Solution

Table showing the classification of each transaction on the financial accounts:

Transactions	Classification
Purchased supplies on credit, $18,600	Non-cash activity
Paid $14,800 cash towards purchase in above	Operating activity
Provided services to customer on credit, $46,925	Non-cash activity
Collected $39,650 cash from account receivable	Operating activity
Record Depreciation expense, $8,175	Non-cash activity
Employee salary accrued, $15,650	Non-cash activity
Paid $15,650 cash to employees for salaries earned	Operating activity
Accrued Interest expense on long-term debt, $1,950	Non-cash activity
Paid a total of $25,000 on long term debt, which includes $1,950 from above transaction	Investing activity
Paid $2,220 cash for 1 year’s insurance coverage in advance	Operating activity
Recognised insurance expense, $1,340, that was paid in a previous year	Non-cash activity
Sold equipment with a book value of $7,500 for $7,500 cash	Investing activity
Declared cash dividend, $12,000	Non-cash activity
Paid cash dividend declared in above	Financing activity
Purchased new equipment for $28,300 cash	Investing activity
Issued common stock for $60,000 cash	Financing activity
Used $10,700 of supplies to produce revenues	Non-cash activity

Answer 23

Expert Solution

Answer 24

Expert Solution

Answer 25

Expert Solution

Answer 26

To determine

(c)

Concept introduction:

Cash flow statement shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. Itis also known as statement of cash flows.

To construct:

A table and indicate the effect of each transaction on the financial accounts in terms of cash inflow and cash outflow.

Answer 27

Answer to Problem 38E

The table is constructed providing the classification of each transaction on the financial accounts in terms of cash flow from operating, investing and financing activities.

Answer 28

Explanation of Solution

Table showing the classification of each transaction on the financial accounts:

Transactions	Classification
Purchased supplies on credit, $18,600	Non-cash activity
Paid $14,800 cash towards purchase in above	Operating activity
Provided services to customer on credit, $46,925	Non-cash activity
Collected $39,650 cash from account receivable	Operating activity
Record Depreciation expense, $8,175	Non-cash activity
Employee salary accrued, $15,650	Non-cash activity
Paid $15,650 cash to employees for salaries earned	Operating activity
Accrued Interest expense on long-term debt, $1,950	Non-cash activity
Paid a total of $25,000 on long term debt, which includes $1,950 from above transaction	Investing activity
Paid $2,220 cash for 1 year’s insurance coverage in advance	Operating activity
Recognised insurance expense, $1,340, that was paid in a previous year	Non-cash activity
Sold equipment with a book value of $7,500 for $7,500 cash	Investing activity
Declared cash dividend, $12,000	Non-cash activity
Paid cash dividend declared in above	Financing activity
Purchased new equipment for $28,300 cash	Investing activity
Issued common stock for $60,000 cash	Financing activity
Used $10,700 of supplies to produce revenues	Non-cash activity