The following selected transactions apply to Topeca Supply for November and December, Year 1. November was the first month of operations. Sales tax is collected at the time of the sale but is not paid to the state sales tax agency until the following month.

1. Cash sales for November, Year 1 were $65,000 plus sales tax of 6%.

2. Topeca Supply paid the November sales tax to the state agency on December 10, Year 1.

3. Cash sales for December, Year 1 were $79,500 plus sales tax of 6%.

Required:

Show the effect of the above transactions on a statements model shown below.

In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or a financing activity (FA). If an element is not affected by the event, leave the cell blank.

Assets TOPECA SUPPLY Horizontal Statements Model Stockholder's Equity Income Statement Common Retained Revenue Expense Net Income Stock Earnings Liabilities - Sales Tax Payable Event Statement of Cash Flows Cash 1 2 + + + 3. RO Req B to E > IA FA