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Copy Magic began the 2013 accounting period with $2,500 cash, $1,400 of common stock, and $1,100 of retained earnings. Copy Magic was affected by the following accounting events during 2013:
1. Purchased $3,600 of copier toner and other supplies on account. 2. Earned and collected $12,300 of cash revenue. 3. Paid $2,700 cash on accounts payable. 4. Adjusted the records to reflect the use of supplies. A physical count indicated that $250 of supplies was still on hand on December 31, 2013.
Required:
a. Show the effects of the events on the financial statements using a horizontal statements model like the following one. In the Cash Flows column, use OA to designate operating activity, IA for investing activity, FA for financing activity, and NC for net change in cash. Use NA to indicate accounts not affected by the event. The beginning balances are entered in the following example:b. Explain the difference between the amount of net income and amount of net cash flow from operating activities.
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