Question

Ollie Company experienced the following events during its first-year operations.

(1)Acquired $72,000 cash from the issue of common stock.
(2)Borrowed $26,000 from the First City Bank.
(3)Earned $59,000 of cash revenue.
(4)Incurred $43,000 of cash expenses.
(5)Paid a $7,000 cash dividend.
(6)Paid $43,000 to purchase land.
What Event numbers will affect the income statement?

Answer 1

Events (3) Earned $59,000 of cash revenue and (4) Incurred $43,000 of cash expenses are the events that will affect the income statement of Ollie Company in its first-year operations.

Step-by-step explanation:

Event numbers that will affect the income statement include (3) Earned $59,000 of cash revenue and (4) Incurred $43,000 of cash expenses. The income statement reflects a company's revenues and expenses and is used to determine its profits or losses over a specific period. Event (3) shows the revenue Ollie Company earned, while event (4) reflects the expenses it incurred to earn that revenue.

Stock issuance (event 1), borrowing money (event 2), paying dividends (event 5), and purchasing land (event 6) are transactions that affect the balance sheet or equity statement, but not the income statement.