Troy Company earned $15,000 of cash revenue. Troy incurred $12,000 of utility expense on account during Year 1. The company made cash payments of $8,000 to reduce its accounts payable during Year 1.
Required
Show the effects of the events on the financial statements using a horizontal financial statements model like the following one. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, NC for net change in cash and NA to indicate the element is not affected by the event.
a. The balance of the accounts payable that would be reported on the December 31, Year 1, balance sheet.
b. The amount of expenses that would be reported on the Year 1 income statement.
c. The amount of net cash flow from operating activities that would be reported on the Year 1 statement of cash flows.
d. The amount of retained earnings that would be reported on the Year 1 balance sheet.
