Applying Financial Statement Linkages to Understand Transactions Consider the effects of the independent transactions, a through ????, on a company’s balance sheet, income statement, and statement of cash flow. Complete the table below to explain the effects and financial statement linkages. Use “1” to indicate the account increases and “????” to indicate the account decreases.

Refer to Exhibit 2.10 as a guide for the linkages.

a.

b. c.

d. e.

f. g. h.
Balance Sheet Cash . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncash assets . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . .
Contributed capital. . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . .
Other equity . . . . . . . . . . . . . . . . . . . . .
Statement of Cash Flows Operating cash flow . . . . . . . . . . . . . . .
Investing cash flow. . . . . . . . . . . . . . . .
Financing cash flow . . . . . . . . . . . . . . .
Income Statement Revenues . . . . . . . . . . . . . . . . . . . . . . .
Expenses . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . .
Statement of Stockholders’ Equity Contributed capital. . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . .

a. Wages are earned by employees but not yet paid.

b. Inventory is purchased on credit.

c. Inventory purchased in transaction b is sold on credit (and for more than its cost).

d. Collected cash from transaction c.

e. Equipment is acquired for cash.

f. Paid cash for inventory purchased in transaction b.
????. Paid cash toward a note payable that came due.
????. Paid cash for interest on borrowings.