Question

Transactions that affect earnings do not necessarily affect cash. Identify the effect, if any, that each of the following transactions would have upon cash and net income. The first transaction has been completed as an example. (If an amount reduces the account balance then enter with negative sign preceding the number e.g. -15,000 or parentheses e.g. (15,000).)

Required:
a. Purchased $133 of supplies for cash.
b. Recorded an adjusting entry to record use of $31 of the above supplies.
c. Made sales of $1,297, all on account.
d. Received $865 from customers in payment of their accounts.
e. Purchased equipment for cash, $2,528.
f. Recorded depreciation of building for period used, $610.

Answer 1

Required :

Items Cash Net Income

a). Supplies of $133 purchased for cash - $ 133 --

b). Recorded the adjustment entry so as to

record use the $31 for the above supplies -- $ 31

c). Made sales of the $ 1297 on account -- $ 1,297

d). $865 received from customers as payment

of accounts $ 865 --

e). $ 2,528 purchased the equipment for cash - $ 2, 528 --

f). Recorded the depreciation of the building

for the period use of $ 610 -- $ 610