Holiday, Inc., was started on January 1, 2009. The company experienced the following events during its first year of operation.

1. Acquired $50,000 cash from the issue of common stock.

2. Paid $12,000 cash to purchase land.

3. Received $50,000 cash for providing tax services to customers.

4. Paid $9,500 cash for salary expenses.

5. Acquired $5,000 cash from the issue of additional common stock.

6. Borrowed $10,000 cash from the bank.

7. Purchased additional land for $10,000 cash.

8. Paid $8,000 cash for other operating expenses.

9. Paid a $2,800 cash dividend to the stockholders.

10. Determined that the market value of the land is $25,000.

Required

a. Record these 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 is the balance in the Retained Earnings account immediately after Event 3 is recorded?
c. What is the net income earned in 2009?
d. What is the amount of total assets at the end of 2009?
e. What is the net cash flow from operating activities for 2009?
f. What is the net cash flow from investing activities for 2009?
g. What is the net cash flow from financing activities for 2009?
h. What is the cash balance at the end of 2009?
i. As of the end of the year 2009, what percentage of total assets were provided by creditors, investors, andearnings?

Transcribed Image Text:

Balance Sbeet Income Statement Event Statement of No. Cash + Land N, Pay + C. Stock. + Ret. Eat Rev. - Exp. Net Inc. Cash Flows 1 50,000NANA 50000NA NA NA 50,000 FA NA