The following transactions pertain to Harrison Imports for Year 1: 1. Started business by acquiring $33,500 cash from the issue of common stock. 2. Provided $72,000 of services for cash. 3. Invested $36,500 in marketable investment securities. 4. Paid $26,550 of operating expense. 5. Received $600 of investment income from the securities. 6. Invested an additional $13,000 in marketable investment securities. 7. Paid a $1,800 cash dividend to the stockholders. 8. Sold investment securities that cost $8,700 for $11,600. 9. Received another $950 in investment income. 10. Determined the market value of the investment securities at the end of the year was $37,350. 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. (Hint: Record the events in T-accounts prior to preparing the financial statements.) (Record the transactions in the given order. Amounts to be deducted, cash outflows and losses should be indicated with a minus sign.) (a) Held-to-Maturity Cash Investment Securities Beg. Bal. Beg. Bal. End. Bal. End. Bal. Common Stock Dividends Beg. Bal. Beg. Bal. End. Bal. End. Bal. Service Revenue Investment Income Beg. Bal. Beg. Bal. End. Bal. End. Bal. Gain on Sale of Invest. Operating Expenses Beg. Bal. Beg. Bal. End. Bal. End. Bal. (b) Trading Cash Investment Securities Beg. Bal. Beg Bal. End. Bal. End. Bal. Common Stock Dividends Beg. Bal Beg. Bal. End. Bal. End. Bal. Service Revenue Investment Income Beg Ball Beg. Bal. End. Bal. End. Bal. Gain on Sale of Invest. Operating Expenses Beg. Bal. Beg. Bal. End. Bal. End. Bal. (Income Statement Account) Unrealized Gain/Loss Beg. Bal End. Bal. (c) Available-for-Sale Cash Investment Securities Beg. Bal. Beg. Bal. End. Bal. End. Bal. Common Stock Dividends Beg Bal Beg Bal. End. Bal. End. Bal. Accum. Other Comp. Income Unrealized Gain/Loss Service Revenue Beg. Bal. Beg. Bal. End. Bal. End. Bal. Investment Income Gain on Sale of Invest. Beg Ball Beg. Bal. End. Bal. End. Bal. Operating Expenses Beg. Bal End. Bal. HARRISON IMPORTS Statements of Cash Flows For the Year Ended December 31, Year 1 Held-to- Investment Securities Classified as Maturity Cash flows from operating activities: Trading Available-for- Sale Net cash flow from operating activities: Cash flow from investing activities: 0 0 Net cash flow from investing activities Cash flow from financing activities 0 0 0 Net cash flow from financing activities Net change in cash Ending cash balance $ 0 $ 0 S 0 HARRISON IMPORTS Income Statements For the Year Ended Year 1 Held-to- Investment Securities Classified as Maturity Trading Available for Sale 0 0 0 S $ 0 S 0 HARRISON IMPORTS Balance Sheets As of December 31, Year 1 Held-to- Investment Securities Classified as Maturity Assets Trading Available for Sale $ 0 $ 0 S 0 Total Assets Stockholders' Equity Total Stockholders' Equity $ $ 0 S
