Nickie Hern started and operated a small family consulting firm in 2013. The firm was affected by two events:
(1) Hern provided $36,000 of services on account, and
(2) She purchased $10,000 of supplies on account. There were $1,800 of supplies on hand as of December 31, 2013.

Required
a. Open T-accounts and record the two transactions in the accounts.
b. Record the required year-end adjusting entry to reflect the use of supplies.
c. Record the above transactions in a horizontal statements model like the following one:

d. Explain why the amounts of net income and net cash flow from operating activities differ.
e. Record and post the required closing entries, and prepare a post-closing trialbalance.

Transcribed Image Text:

Assets -Lia +Equity Rev.ExpNet Inc. Cash Flow Accts. Accts. Ret. Rec. + Supplies = Pay. + Earn.