Pizza Express Incorporated began the Year 2 accounting period with $8,000 cash, $6,000 of common stock, and $2,000 of retained earnings. Pizza Express was affected by the following accounting events during Year 2: Purchased $12,500 of supplies on account. Earned and collected $20,000 of cash revenue. Paid $11,000 cash on accounts payable. Adjusted the records to reflect the use of supplies. A physical count indicated that $2,500 of supplies was still on hand on December 31, Year 2.

Required: a. Show the effects of the events on the financial statements using a horizontal statements model given below. In the Statement of Cash Flows column, use OA to designate operating activity, IA for investing activity, FA for financing activity, and

\begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline \multicolumn{17}{|c|}{ PIZZA EXPRESS INCORPORATED } \\ \hline \multicolumn{17}{|c|}{ Effect of Events on Financial Statements for Year 2} \\ \hline \multirow{3}{*}{ Event } & \multicolumn{9}{|c|}{ Balance Sheet } & \multirow{2}{*}{\multicolumn{5}{|c|}{ Income Statement }} & \multirow{3}{*}{\multicolumn{2}{|c|}{\begin{tabular}{c} Statement of Cash \\ Flows \end{tabular}}} \\ \hline & \multicolumn{3}{|c|}{ Assets } & \multirow{2}{*}{\begin{tabular}{l} = \\ = \end{tabular}} & \multirow{2}{*}{\begin{tabular}{c} Liabilities \\ Accounts \\ Payable \end{tabular}} & \multirow{2}{*}{\begin{tabular}{l} + \\ + \end{tabular}} & \multicolumn{3}{|c|}{ Stockholders' Equity } & & & & & & & \\ \hline & Cash & + & Supplies & & & & \begin{tabular}{l} Common \\ Stock \end{tabular} & + & \begin{tabular}{l} Retained \\ Earnings \end{tabular} & Revenue & - & Expense & = & Net Income & & \\ \hline \begin{tabular}{l} Beginning \\ balance \end{tabular} & 8,000 & + & & = & & + & 6,000 & + & 2,000 & & - & & = & & & \\ \hline 1. & & + & & = & & + & & +? & & & - & & = & & & \\ \hline 2. & & + & & = & & + & & +3 & & & - & & = & & & \\ \hline 3. & & + & & = & & + & & + & & & - & & = & & & \\ \hline 4. & & + & & = & & + & & + & & & - & & = & & & \\ \hline Totals & 8,000 & + & 0 & = & 0 & + & 6,000 & + & 2,000 & 0 & - & 0 & = & 0 & 0 & \\ \hline \end{tabular}