The Bruce Spruce Co. experienced the following events during its first year of operations, Year 1:
1. Acquired $75,000 cash by issuing common stock.
2. Earned $48,000 cash revenue.
3. Paid $34,000 cash for operating expenses.
4. Borrowed $20,000 cash from a bank.
5. Paid $38,000 cash to purchase land.
6. Paid a $2,000 cash dividend.

Required
a. Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction is shown as an example.

b. Prepare a formal income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows.

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Balance Sheet Income Statement Stk. Equity Liab. Statement of Cash Flows Assets Event + Land Notes Pay. + Com. Stk. + Ret. Earn. Rev. - Exp. = Net Inc. Cash 1. 75,000 75,000 + NA NA NA NA NA NA 75,000 FA