$3-$statement Questions: $($Assume $40\%$ tax rate$)$

How does $$10$ in stock$-$based compensation flow through the $3$ statements?

a$.$ Hint: Stock based compensation affects which of the three components of a

Balance Sheet $($A$,$ L$,$ SE$)?$

b$.$ Hint: If you issue stock to pay employees $$ are you really paying out cash? If

not, think about what adjustments you need to make.

$$50$ of inventory is purchased using cash. How does it flow through the $3$ statements?

Prepaid Expenses decreases by $$10,$ how does this flow through the three statements?

Deferred Revenue decreases by $$20,$ how does this flow through the three statements?

Deferred Revenue increases by $$20,$ how does this flow through the three statements?