Exercise 1: Explain how the following transactions affected the balance sheet equation by completing the table below. Record an I for increase, D for decrease, or N/E for no effect. The table contains the solution for the first transaction.

1. Received cash from the sale of common stock to investors
2. Borrowed money from a bank
3. Purchased equipment (furniture, computers, and so forth) with cash
4. Purchased some inventory with cash
5. Purchased additional inventory on credit (i.e., the promise to pay cash at a future date)
6. Made a sale by selling some of the inventory to a customer on credit
7. Recorded the decrease in inventory associated with the sale made in number 6 above.

Explain how each of the transactions in Exercise 1 affected the statement of cash flows by completing the following table. Use the I, D, and N/E symbols established in Exercise 1 to do so.

Trans.	Operating Activities	Investing Activities	Financing Activities
1	N/E	N/E	I
2
3
4
5
6
7

Trans.	Assets		Liabilities	Shareholders Equity
1	I		N/E	I
2
3
4
5
6
7