Supplies and the financial statements model Pizza Express Inc. began the 2016 accounting period with $2,500 cash, $1,400 of common stock, and $1,100 of retained earnings. Pizza Express was affected by the following accounting events during 2016: 1. Purchased $3,600 of 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, 2016.
Required:
a. Show the effects of the events on the financial statements using a horizontal statements model.
b. Explain the difference between the amount of net income and amount of net cash flow from operating activities.