The following transactions apply to Bialis Co. for 2006, its first year of operations.

1. Issued \($100,000\) of common stock for cash.

2. Provided \($86,000\) of services on account.

3. Collected \($75,000\) cash from accounts receivable.

4. Loaned \($10,000\) to Horne Co. on October 1, 2006. The note had a one-year term to maturity and an 8 percent interest rate.

5. Paid \($32,000\) of salaries expense for the year.

6. Paid a \($2,000\) dividend to the stockholders.

7. Recorded the accrued interest on December 31,2006.

8. Determined that \($560\) of accounts receivable were uncollectible.

Required:

a. Show the effects of the above transactions in a horizontal statements model like the one shown below.

b. Prepare the income statement, balance sheet, and statement of cash flows for 2006.

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Assets = Liab. + Equity - Rev. Exp. = Net Inc. Cash Flows Event Cash + Accts. Rec. + Notes Rec. + Int. Rec. = Com. Stk. + Ret. Earn.