Marshall Co. was started in 2006. During 2006, the company (1) acquired \($9,000\) cash from the issue of common stock, (2) earned cash revenue of \($18,000\), (3) paid cash expenses of \($12,500\), and (4) paid a \($1,000\) cash dividend to the stockholders.

Required:

a. Record these four events in a horizontal statements model. Also, in the Cash Flows column, clas¬ sify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first event is shown as an example.

b. What does the income statement tell you about the assets of this business?

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Balance Sheet Income Statement Event Statement of No. Cash = N. Pay. + Com. Stk. + Ret. Earn. Rev. - Exp. = Net Inc. Cash Flows 1. 9,000 NA 9,000 + NA NA - NA === NA 9,000 FA