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.

Cash Net Income
A. Purchased $100 of supplies for cash. –$100 $0
B. Recorded an adjusting entry to record
use of $30 of the above supplies.
C. Made sales of $1,250, all on account. 1297 1164
D. Received $850 from customers in payment
of their accounts. 865 299
E. Purchased equipment for cash, $2,600. 2528 2229
F. Recorded depreciation of building for period
used, $650. 610 2839

Answer 1

Item cash Net income

a Purchase of Supplies of cash -$100 -

b Adjusting entry for use of supplies - -$30

c Made sales on account - $1,250

Or

Made sales on account - $1,297

d Received cash from customer on acct $850 -

Or

Received cash from customer on acct $865 -

e Purchased equipment for cash -$2,600 -

Or

Purchased equipment for cash -$2,528 -

f Depreciation of building to be recorded - -$650

Or

Depreciation of building to be recorded - -$610