Question

Problem 1: Financial Statement Articulation       

      Consider the effects of the independent transactions, a through d, on a company’s balance sheet, income statement, statement of cash flows, and statement of stockholders’ equity.

1. Services were performed for cash.
2. Inventory was purchased for cash.
3. Wages were accrued at the end of the period.
4. Rent was paid in cash.

Complete the table below to explain the effects and financial statement linkages. Use “+” to indicate the account increases and “–” to indicate the account decreases.

	a.	b.	c.	d.
Balance sheet
Cash
Noncash assets
Total liabilities
Contributed capital
Retained earnings
Other equity
Statement of cash flows
Operating cash flow
Investing cash flow
Financing cash flow
Income statement
Revenues
Expenses
Net earnings
Statement of stockholders’ equity
Contributed capital
Retained earnings

Answer 1

	a	b	c	d
Balance sheet
Cash	+	-		-
Noncash assets
Total liabilities			+
Contributed capital
Retained earnings	+		-	-
Other equity
Statement of cash flows
Operating cash flow	+	-		-
Investing cash flow
Financing cash flow
Income statement
Revenues	+
Expenses			+	+
Net earnings	+		-	-
Statement of stockholders’ equity
Contributed capital
Retained earnings	+		-	-