Please help fill this chart out. On June 1, Year 1, Hamlin, Inc. paid $12,000 fo

Question

Please help fill this chart out.

On June 1, Year 1, Hamlin, Inc. paid $12,000 for 12 months rent on its warehouse in Huntsville, Alabama. In addition, on October 1, Year 1, Hamlin paid $3,000 for a one-year insurance policy on the warehouse. Hamlin's reporting period ends on December 31st of each year.

Required
Show how both prepaid purchases and the associated year-end adjustments at the end of Year 1 will affect a financial statements model. (In the Statement of Cash Flows column, use OA to designate operating activity, IA for investing activity, FA for financing activity, NC for net change in cash and NA to indicate the element is not affected by the event. Enter any decreases to account balances and cash outflows with a minus sign. Do not round intermediate calculations.)

HAMLIN, INC. Effect of Events on Financial Statements for Year 1 Event Balance Sheet Income Statement Statement of Cash Flows Assets = Liabilities + Stockholders’ Equity Revenue – Expenses = Net Income Cash + Prepaid Rent + Prepaid Ins. = Accts. Pay. + Retained Earnings 1. Prepaid Rent + + = + – = 2. Prepaid Ins. + + = + – = 3. Rent Adj. + + = + – = 4. Ins. Adj. + + = + – = Bal. 0 + 0 + 0 = 0 + 0 0 – 0 = 0 0

Explanation / Answer

(7000)

12000/12*7

(750)

3000/12*3

Event Balance sheet Income statement Statement of cash flows Assets = Liabilities + Stockholders' equity Cash + prepaid rent + prepaid insurance = accounts payable + retained earnings revenue - expenses = net income 1. Prepaid rent (12000) 12000 (12000) OA 2. Prepaid insurance (3000) 3000 (3000) OA 3. Rent Adj.

(7000)

12000/12*7

(7000) 7000 N/A 4. Ins. Adj

(750)

3000/12*3

(750) 750 N/A Balance (15000) 5000 2250 0 (7750) 7750 (15000) NC

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