The Double-Entry Accounting System
Roy Edwards started and operated a small family firm in 2015. The firm was affected by two events (1) Edwards provided $25,000 of services on account, and (2) he purchased $2,800 of supplies on account. There was $250 of supplies on hand as of December 31, 2015. Record in one
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 preceding transactions in a horizontal statement model like this one
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Assets = Liab. + Equity
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Rev - Exp. = Net Inc.
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Cash Flow
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Accts, Rec. + Supplies = Accts. Pay. + Ret. Earn.
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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 trial balance.