ave & Exit Submit Check my work On June 1, Year 1, Hamlin, Inc. paid $12,000 for

Question

ave & Exit Submit Check my work 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 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 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 Balance Sheet Income Statement Stockholders Equity Retained Event Assets Liabilities Net income Cash+ Prepaid Rent+Prepaid Ins. Accts 1. Prepaid Rent 2. Prepaid Ins 3. Rent Ad 4. Ins. Ad Bal

Explanation / Answer

HAMLIN INC., Effects of events on financial statement for Year 1 Events Balance sheet Income Statement Statement of Cash flows Assets = Liabilities + Stockholder's equity Revenue - Expenses = Net Income Inflows Outflows Cash + Prepaid Rent + Prepaid Insurance = Accounts Payable + Retained earnings 1 Prepaid Rent -12000 + 12000 + 0 = 0 + 0 0 - 0 = 0 0 12000 Operating Activity 2 Prepaid Insurance -3000 + 0 + 3000 = 0 + 0 0 - 0 = 0 0 3000 Operating Activity 3 Rent Adjustment 0 + -7000 + 0 = 0 + 0 0 - 7000 = -7000 0 0 4 Insurance Adjustment + 0 + -750 = 0 + 0 0 - 3000 = -3000 0 0

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