Reference no: EM13485361
Please include amounts in the columns for March's Net Income and March's Cash Flow. During March, each of the following events occurred at Frolic Park, Inc.
1.Sold $18,000 of goods on credit to customers. Received a 25% down payment with the balance on account.
2.Paid $500 cash for office supplies that will be used during April.
3.Received $3000 from a customer in full payment of her account balance.
4.Borrowed $80,000 from a local bank to be repaid in monthly installments plus interest starting in April.
5.Paid rent on the office space ($1,200 per month) for the months of February, March, and April.
6.Distributed monthly paychecks to employees totaling $13,300. 30% was for work performed in February and the balance for work performed in March.
7.Purchased new Internet server equipment at a cost of $50,000
8.Purchased a 3-year fire insurance policy at a total cost of $10,800. Its coverage began on March 1.
9.Purchased merchandise from suppliers on credit at a cost of $70,000
10.Collected $22,000 from customers in payment of their accounts. 80% of this amount was from sales recorded in February and the balance was from March sales.
11.Collected four months? rent in advance (at $700 per month) from a tenant who will move in on April 1.
12.Paid $45,000 to suppliers in partial payment for goods purchased in #9 above.
13.Sold $33,000 of merchandise to customers on credit.
14.Sold an investment in stocks and bonds for $28,000; the same amount that had been paid for it. A 3-year, 9% note receivable was accepted in full payment.
A. Identify whether each transaction is an operating, investing, or financing activity.
B. For each event, identify the effect it had on March?s net income and on March?s cash flow form operations.
C. What does this problem suggest to you about the hazards of trying to manage an organization with accrual-basis accounting information only? Discuss.