Fun in the Sun Incorporated operates a beach chair rental service in south Florida. The company experienced the following events in its first year of operations: 1. Issued $102,000 of common stock for cash. 2. Provided $72,000 of rental services on account. 3. Collected $29,800 cash from accounts receivable. 4. Adjusted the accounting records to reflect uncollectible accounts expense for the year. The company estimates that 10 percent of the ending accounts receivable balance will be uncollectible. Required: Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction is shown as an example. Note: Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank if no input is needed. Event Number Cash + Balance Sheet Income Statement Assets Net Realizable Value of Accounts Receivable = Liabilities + Stockholders' Equity Net Accounts Payable + Common Stock + Retained Earnings Revenue Expenses Income Statement of Cash Flows = 1. 102,000 + + 102,000 + ☐☐ 102,000 FA 2. + + + = 3. + 4. + Total 102,000 + 0 +++ 0+ 102,000 + +++ 0 0 0 = 0 102,000 *NC *NC Net change in cash
Fun in the Sun Incorporated operates a beach chair rental service in south Florida. The company experienced the following events in its first year of operations: 1. Issued $102,000 of common stock for cash. 2. Provided $72,000 of rental services on account. 3. Collected $29,800 cash from accounts receivable. 4. Adjusted the accounting records to reflect uncollectible accounts expense for the year. The company estimates that 10 percent of the ending accounts receivable balance will be uncollectible. Required: Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction is shown as an example. Note: Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank if no input is needed. Event Number Cash + Balance Sheet Income Statement Assets Net Realizable Value of Accounts Receivable = Liabilities + Stockholders' Equity Net Accounts Payable + Common Stock + Retained Earnings Revenue Expenses Income Statement of Cash Flows = 1. 102,000 + + 102,000 + ☐☐ 102,000 FA 2. + + + = 3. + 4. + Total 102,000 + 0 +++ 0+ 102,000 + +++ 0 0 0 = 0 102,000 *NC *NC Net change in cash
College Accounting (Book Only): A Career Approach
13th Edition
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:Scott, Cathy J.
Chapter2: T Accounts, Debits And Credits, Trial Balance, And Financial Statements
Section: Chapter Questions
Problem 2PA: B. Kelso established Computer Wizards during November of this year. The accountant prepared the...
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Transcribed Image Text:Fun in the Sun Incorporated operates a beach chair rental service in south Florida. The company experienced the following events
in its first year of operations:
1. Issued $102,000 of common stock for cash.
2. Provided $72,000 of rental services on account.
3. Collected $29,800 cash from accounts receivable.
4. Adjusted the accounting records to reflect uncollectible accounts expense for the year. The company estimates that 10 percent
of the ending accounts receivable balance will be uncollectible.
Required:
Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement
of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column,
classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction is shown
as an example.
Note: Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank if no input is needed.
Event
Number
Cash +
Balance Sheet
Income Statement
Assets
Net
Realizable
Value of
Accounts
Receivable
= Liabilities + Stockholders' Equity
Net
Accounts
Payable
+
Common
Stock
+
Retained
Earnings
Revenue
Expenses Income
Statement of Cash
Flows
=
1.
102,000 +
+
102,000 +
☐☐
102,000
FA
2.
+
+
+
=
3.
+
4.
+
Total
102,000 +
0
+++
0+ 102,000 +
+++
0
0
0 =
0
102,000
*NC
*NC Net change in cash
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