The following events apply to Lewis and Harper, a public accounting firm, for the Year 1 accounting period:

1. Performed $69,500 of services for clients on account.
2. Performed $43,000 of services for cash.
3. Incurred $34,000 of other operating expenses on account.
4. Paid $16,500 cash to an employee for salary.
5. Collected $50,000 cash from accounts receivable.
6. Paid $18,000 cash on accounts payable.
7. Paid an $5,000 cash dividend to the stockholders.
8. Accrued salaries were $2,600 at the end of Year 1.

a. Show the effects of the events on the financial statements using a horizontal financial statements model like the following one. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, and NC for net change in cash. The first event is recorded as an example. (Enter any decreases to account balances with a minus sign. Not all cells in the "Statement of Cash Flows" column may require an input - leave cells blank if there is no corresponding input needed.)

LEWIS AND HARPER

Horizontal Financial Statement Model

For Accounting Year 1

Event

Assets

=

Liabilities

+

Stockholders' Equity

Income Statement

Statement of Cash Flow

Cash

+

Accounts Receivable

=

Accounts Payable

+

Salaries Payable

+

Retained Earnings

Revenue

Expense

=

Net Income

1.

+

69,500

=

+

+

69,500

69,500

=

69,500

2.

+

=

+

+

=

3.

+

=

+

+

=

4.

+

=

+

+

=

5.

+

=

+

+

=