The following events pertain to James Cleaning Company: 1. Acquired $15,000 cash

Question

The following events pertain to James Cleaning Company: 1. Acquired $15,000 cash from the issue of common stock. 2. Provided services for $8,000 cash. 3. Provided $18,000 of services on account. 4. Collected $11,000 cash from the account receivable created in Event 3. 5. Paid $1,400 cash to purchase supplies. 8. Had $100 of supplies on hand at the end of the accounting period. 7. Received $3,800 cash in advance for services to be performed in the future. 8. Performed one-half of the services agreed to in Event 7 9. Paid $8,500 for salaries expense. 10. Incurred $2,800 of other operating expenses on account. 11. Paid $2, 100 cash on the account payable crested in Event 10. 12. Paid a $1,000 cash dividend to the stockholders. Show the effects of the events on the financial statements following one. In the Cash Flows column, use the letters OA to designate operating activity, IA for investing activity, FA for financing activity, NC for net change in cash and NA to indicate accounts not affected by the event. The first event is recorded as an example. (Enter any decreases to account balances and cash outflows with a minus sign.) using a horizontal statements model like the Effect of Events on the Financial Statements Liabilities Stockholders' Equity Income Statement Statement of Cash Flows Cash Accounts Common Retained Revenue -Expenses Net Income 15,000 15,000+ 15,000 FA 10. Bal.

Explanation / Answer

James Cleaning Company Effect of Events on the Financial Statements Event No. Assets = Liabilities + Stockholders' Equity Income Statement Statement of Cash Flows Cash + Accounts Receivable + Supplies = Accounts Payable + Unearned Revenue + Common Stock + Retained Earnings Revenue - Expenses = Net Income 1          15,000 + + = + +         15,000 + - =                   -           15,000 FA 2            8,000 + + = + + +             8,000            8,000 - =            8,000           8,000 OA 3 +             18,000 + = + + +           18,000          18,000 - =          18,000 4          11,000 +          (11,000) + = + + + - =                   -           11,000 OA 5          (1,400) + +            1,400 = + + + - =                   -           (1,400) OA 6 + +          (1,300) = + + +           (1,300) -            1,300 =          (1,300) 7            3,600 + + = +                 3,600 + + - =                   -             3,600 OA 8 + + = +              (1,800) + +             1,800            1,800 - =            1,800 9          (6,500) + + = + + +           (6,500) -            6,500 =          (6,500)         (6,500) OA 10 + + =              2,800 + + +           (2,800) -            2,800 =          (2,800) 11          (2,100) + + =            (2,100) + + + - =                   -           (2,100) OA 12          (1,000) + + = + + +           (1,000) - =                   -           (1,000) FA Bal.          26,600 +               7,000 +                100 =                  700 +                 1,800 +         15,000 +           16,200          27,800 -          10,600 =          17,200         26,600 Total Assets = 33700 Total Liabilities = 2500 Total stockholders Equity = 31200 Total Liabilities & Stockholders' Equity = 33700

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