Exercise 2-2B Tpes of transactions and the horizontal financial statements model Pet Partners experienced the following events during its first year of operations, Year 1: 1. Acquired cash by issuing common stock LO 2-1 2. Borrowed cash from a bank. 3 Signed a contract to provide services in the future. Purchased land with cash. 4. Paid cash for operating expenses 6. Paid a cash dividend to the stockholders 7. Determined that the market value of the land is higher than the historical cost 5. Required Indicate whether each event is an asset source, use, or exchange transaction. a. 1 2 3. 4 5 6 7 EXERCISE 2-2B (cont.) Focus Edmonds IFAB 1e CH02 Working Papers (1) Protected View Saved Search out References Mailings Review View Help e Internet can contain viruses. Unless you need to edit, it's safer to stay in Protected View. Enable Editing Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. Indicate whether the event increases (D, decreases (D), or does not affect (NA) each element of the financial statements. 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. Balance Sheet Income Statement Statement of Assets Liab. Stk. Equity + Cash Flows Event Notes Pay. +Com. Stk. +Ret. Earn. Cash + Land Net Inc. Rev Exp. 1 + NA NA + I FA NA NA NA NA Pet Partners Horizontal Statements Model for Year 1 Balance Sheet Income Statement Statement of Cash Flows Stockholders' Equity Retained Earnings NA Assets Liab. Revenue Expense-Net Inc. Event Notes Payable NA ommon Stock Cash Land 1 NA NA NA NA FA 2 3 4 5 6 7 Fecus no Celcalate missing amounts and interpret resalts Exercise 2-3B LO 2-1 The following horizontal floancial statements model shows the transactions expericnced by Sorfs Up Industries during Year 1. The table contains missing data that are labeled with alphabetic characters (a) through (n). Assume all transactions shown in the accOunting equation are cash transactions. Balance Sheet Income Statement Statement of +Stockholders Equity Liab. Assets Cash Flows Exp Net Inc. Rev Notes Pay. + Com. Stk. + Ret Eam Cash + Land Event NA 0 + 0 + 0m 0+ Beg. 500,000 FA (b) NA (c) (a)+ NA 500,000 + NA NA + 1. 400,000 NA (d) (e) NA 400,000+ NA - NA NA 400,000 2 NA (475,000) () NA- NA NA (475,000)+ NA + NA + 3. 105,000 OA NA 105,000 105,000 NA + NA NA (n) + 4 (80,000) OA 04)-(80,000) NA- (80,000)+ NA + NA + NA 5. (15,000) NA NA NA +(15,000) NA- (15,000) + NA NA + 6 25,000 435,000 NC (n) 80,000 400,000+500,000 +10,000 (m)+ 475,000 End Required a. Use amounts or alphabetic letters to fill in the blanks highlighted by each character (a) through (n). Use the letters NA to indicate that no amount is related to the alpha character shown in the model. Use the letters FA to represent financing activity; IA to represent investing activitics; OA to represent operating activities, and NC to represent net change. b. Determine the total amount of assets that will appear on the December 31. Year 1, balance sheet. . Determine the total amount of net income that will appear on the income statement d. Determine the amount of cash flow from investing activities that will appear on the statement of cash flows
