The following transactions apply to Hooper Co. for Year 1, its first year of operations:
1. Issued $60,000 of common stock for cash.
2. Provided $90,000 of services on account.
3. Collected $78,000 cash from accounts receivable.

4. Loaned $20,000 to Mosby Co. on November 30, Year 1. The note had a one-year term to maturity and a 6 percent interest rate.
5. Paid $26,000 of salaries expense for the year.
6. Paid a $2,000 dividend to the stockholders.
7. Recorded the accrued interest on December 31, Year 1 (see item 4).
8. Estimated that 1 percent of service revenue will be uncollectible.

Required
a. Show the effects of these transactions in a horizontal statements model like the one shown next:

b. Prepare the income statement, balance sheet, and statement of cash flows for Year 1.

Transcribed Image Text:

Balance Sheet Income Statement Assets Stk. Equity Statement of Cash Event No. Net Realizable Cash + Value of Recelvable + Rec. + Rec. Ret. Int. Com. Flows Notes Net Inc. Stk. + Earn. Rev. Exp.