The following transactions pertain to Harrison Imports for Year 1: 1. Started business by acquiring $30,000 cash from the issue of common stock. 2. Provided $90,000 of services for cash. 3. Invested $35,000 in marketable investment securities. 4. Paid $18,000 of operating expense. 5. Received $500 of investment income from the securities. 6. Invested an additional $16,000 in marketable investment securities. 7. Paid a $2,000 cash dividend to the stockholders. 8. Sold investment securities that cost $8,000 for $14,000. 9. Received another $1,000 in investment income. 10. Determined the market value of the investment securities at the end of the year was $42,000. Required Use a vertical statements model to prepare a Year 1 income statement, balance sheet, and statement of cash flows, assuming that the marketable investment securities were classified as (a) held to maturity, (b) trading, and (c) available for sale. Record the events in T- accounts prior to preparing the financial statements. Complete this question by entering your answers in the tabs below. Held to Available for Vertical Trading Maturity Sale Statements Record the events in T-accounts prior to preparing the financial statements. Assume that the marketable investment securities were classified as held to maturity. Cash Investment Securities Beginning Balance Beginning Balance Ending Balance Ending Balance Common Stock Dividends Beginning Balance Beginning Balance Ending Balance Ending Balance Service Revenue Accumulated Other Comprehensive Income Unrealized Gain/Loss Beginning Balance Ending Balance Ending Balance Investment Income Gain on Sale of Investment Beginning Balance Beginning Balance Ending Balance Ending Balance Operating Expenses (Income Statement Account) Unrealized Gain/Loss Beginning Balance Beginning Balance Ending Balance Ending Balance Complete this question by entering your answers in the tabs below. Held to Maturity Trading Available for Sale Vertical Statements Record the events in T-accounts prior to preparing the financial statements. Assume that the marketable investment securities were classified as trading. Cash Investment Securities Beginning Balance Beginning Balance Ending Balance Ending Balance Common Stock Dividends Beginning Balance Beginning Balance Ending Balance Ending Balance Service Revenue Accumulated Other Comprehensive Income Unrealized Gain/Loss Beginning Balance Beginning Balance Ending Balance Ending Balance Investment Income Gain on Sale of Investment Beginning Balance Beginning Balance Ending Balance Ending Balance Operating Expenses (Income Statement Account) Unrealized Gain/Loss Beginning Balance Beginning Balance Ending Balance Ending Balance Complete this question by entering your answers in the tabs below. Held to Maturity Trading Available for Sale Vertical Statements Record the events in T-accounts prior to preparing the financial statements. Assume that the marketable investment securities were classified as available for sale Cash Investment Securities Beginning Balance Beginning Balance Ending Balance Ending Balance Common Stock Dividends Beginning Balance Beginning Balance Ending Balance Ending Balance Service Revenue Accumulated Other Comprehensive Income Unrealized Gain/Loss Beginning Balance Beginning Balance Ending Balance Ending Balance Investment Income Gain on Sale of Investment Beginning Balance Beginning Balance Ending Balance Ending Balance Operating Expenses (Income Statement Account) Unrealized Gain/Loss Beginning Balance Beginning Balance Ending Balance Ending Balance Complete this question by entering your answers in the tabs below. Held to Maturity Trading Available for Sale Vertical Statements Use a vertical statements model to prepare a Year 1 income statement, balance sheet, and statement of cash flows, assuming that the marketable investment securities were classified as (a) held to maturity, (b) trading, and (c) available for sale. (Amounts to be deducted, cash outflows and losses should be indicated with a minus sign.) HARRISON IMPORTS Vertical Statements For Year Ended Year 1 Held to Investment Securities Classified as Maturity Income Statements Trading Available for Sale Balance Sheets Assets Total assets Stockholders' equity Total stockholders' equity Statements of Cash Flows Cash flows from operating activities: Net cash flow from operating activities Cash flows from investing activities: Net cash flow from investing activities Cash flows from financing activities: Net cash flow from financing activities Net change in cash Ending cash balance
