The Ramires, Incorporated experienced the following events during its first year of operations, Year 1: 1. Acquired $56,000 cash by issuing common stock. 2. Earned $52,000 cash revenue. 3. Paid $27,000 cash for operating expenses 4. Borrowed $15,000 cash from a bank. 5. Paid $40,000 cash to purchase land 6. Paid a $1,000 cash dividend. Required a. Show the effects of the events on the financial statements using a horizontal 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, NC for net change in cash and NA to indicate the element is not affected by the event. The first event is recorded as an example. b. Prepare a formal income statement, statement of changes in stockholders' equity, balance sheet, and statement of cash flows. THE RAMIRES, INCORPORATED Horizontal Financial Statements Model for Year 1 Balance Sheet Income Statement Stockholders Revenue Expense Statement of Cash Flows Assets Liabilities = Net Income Equity Event No. Common Stock +Retained Cash + Land = NotesPayable- Earnings 56,000+ 56,000 + 56,000 FA 2. 3. 4. 6 01-I-, 56,000 56,000+ 0 o Totals 56,000 Required A Required B Inc RequiredB Stmttkolder Eq Required B Bal Sheet Required B Stmt Cash Stmt Flows Prepare an income statement for Year 1. THE RAMIRES, INCORPORATED Income Statement For the Period Ended December 31, Year1 0 B Required A Required B Inc Required Stmt Required B Bal Required B AStmt stkholder E Stmt Cash Flows Sheet Prepare a statement of cash flows for Year 1. The RAMIRES, INCORPORATED Statement of Changes in Stockholders' Equity For the Year Ended December 31, Year 1 Beginning common stock Ending common stock Beginning retained earnings 0 Ending retained earnings Total stockholders' equity 0 0 Required B Eq Required B Inc Required B Bal Required B Stmt AStmt Stkholder Stmt Cash Flows Required A Sheet Prepare a balance sheet for Year 1. THE RAMIRES, INCORPORATED Balance Sheet As of December 31, Year 1 Assets Total assets Liabilities Total liabilities Stockholders' Equity Total stockholders' equity Total liabilities and stockholders' equity 0 THE RAMIRES, INCORPORATED Statement of Cash Flows For the Year Ended December 31, Year 1 Cash flows from operating activities Net cash flow from operating activities Cash flows from investing activities 0 Net Cash Flow from Investing activities Cash flows from financing activities: 0 Net cash flow from financing activities 0 Net increase in cash Ending cash balance 0