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.

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

a. Purchased $133 of supplies for cash.

Effect on Cash: -$133

Effect on Net Income: -

b. Recorded an adjusting entry to record use of $31 of the above supplies.

Effect on Cash: -

Effect on Net Income: -$31

c. Made sales of $1,297, all on account.

Effect on Cash: -

Effect on Net Income: $1,297

d. Received $865 from customers in payment of their accounts.

Effect on Cash: $865

Effect on Net Income: -

e. Purchased equipment for cash, $2,528.

Effect on Cash: -$2,528

Effect on Net Income: -

f. Recorded depreciation of building for period used, $610.

Effect on Cash: -

Effect on Net Income: -$610