Arnett Co. was started in 2011. During 2011, the company (1) acquired $11,000 cash from the issue of common stock, (2) earned cash revenue of $18,000, (3) paid cash expenses of $10,500, and (4) paid a $1,000 cash dividend to the stockholders.

Required

a. Record these four events in a horizontal statements model. Also, in the Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first event is shown as an example.

b. What does the income statement tell you about the assets of thisbusiness?

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Balance Sheet Income Statement Event Statement of No. Cash = N.Pay + C. Stock. + Ret. Ear. Rev. - Exp. = Net Inc. Cash Flows 1 11,000 NA 11,000+ NA NA NA NA 1,000 FA