Rebecca Thompson started a small local law firm to provide various consulting services to clients. Her law firm experienced the following events in Year 1, its first year of operation:

1. Borrowed $88,000 cash from a local bank to assist in start-up operations.
2. On May 1, Year 1, the firm collected $37,200 cash for consulting services it agreed to provide over the next 12 months.
3. On December 31, Year 1, the firm adjusted the accounts to reflect the amount of consulting service revenue recognized in Year 1. Assume services are provided evenly throughout the 12 months.

Required:

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. The first transaction is shown as an example.

Rebecca Thompson started a small local law firm to provide various consulting services to clients. Her law firm experienced the following events in Year 1, its first year of operation: 1. Borrowed $88,000 cash from a local bank to assist in start-up operations. 2. On May 1, Year 1, the firm collected $37,200 cash for consulting services it agreed to provide over the next 12 months. 3. On December 31, Year 1, the firm adjusted the accounts to reflect the amount of consulting service revenue recognized in Year 1. Assume services are provided evenly throughout the 12 months. 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. The first transaction is shown as an example. Note: In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, and I for net change in cash. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require input leave cells blank if there is no corresponding input needed