Question

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At the beginning of Year 2, Oak Consulting had the following normal balances in its accounts:

Account	Balance
Cash	$	28,200
Accounts receivable		18,400
Accounts payable		12,400
Common stock		21,900
Retained earnings		12,300

The following events apply to Oak Consulting for Year 2:

1. Provided $72,200 of services on account.
2. Incurred $3,000 of operating expenses on account.
3. Collected $46,900 of accounts receivable.
4. Paid $30,100 cash for salaries expense.
5. Paid $13,860 cash as a partial payment on accounts payable.
6. Paid a $8,900 cash dividend to the stockholders.

c. Show the beginning balances and the events in a horizontal statements model such as the following one: (In the Cash Flow column, use the initials "OA" for operating activities, "FA" for financing activities and "NC" for net change in cash. Select "NA" wherever required. Enter any decreases to account balance and cash outflows with a minus sign.)

Answer 1

c.

	Balance Sheet							Income Statement					Statement of Cash Flows
	Assets		=	Liabilities	+	Equity
Events	Cash	Accounts receivable	=	Accounts Payable	+	Common stock	Retained earnings	Revenue	-	Expense	=	Net Income
Beg. Bal.	28200	18400	=	12400	+	21900	12300		-		=
a.		72200	=		+		72200	72200	-		=	72200	0	NA
b.			=	3000	+		-3000		-	3000	=	-3000	0	NA
c.	46900	-46900	=		+				-		=		46900	OA
d.	-30100		=		+		-30100		-	30100	=	-30100	-30100	OA
e.	-13860		=	-13860	+				-		=		-13860	OA
f.	-8900		=		+		-8900		-		=		-8900	FA
	22240	43700		1540	+	21900	42500	72200	-	33100	=	39100	-5960	NC

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