Larry Cornerstone started a company providing agency services to athletes competing at a professional level. The...

 

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Larry Cornerstone started a company providing agency services to athletes competing at a professional level. The company experienced the following events during its first year of operations, Year 1 1 Financed initial operations by borrowing $31,000 from a local bank. Interest payments on the loan are not due until the loan fully matures. 2. Adjusted the accounting records on December 31, Year 1 to recognize accrued interest expense on the bank note. The note, naud on July 1, Year 1, had a one-year term and a 6 percent annual interest rate. Required: Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Note: In the Cash Flow column, use OA to designate operating activity, IA for Investment activity, FA for financing activity, and NC for net change in cash. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require an input-leave cells blank if there is no corresponding input needed. Balance Sheet Income Statement Event Number Assets Liabilities Stockholders' Equity Statement of Cash Net Cash Notes Payable Interest Payable Common Retained Revenue Expenses Flows Income Stock Earnings L + 2 Total 0 . . 01+ 4 Larry Cornerstone started a company providing agency services to athletes competing at a professional level. The company experienced the following events during its first year of operations, Year 1 1 Financed initial operations by borrowing $31,000 from a local bank. Interest payments on the loan are not due until the loan fully matures. 2. Adjusted the accounting records on December 31, Year 1 to recognize accrued interest expense on the bank note. The note, naud on July 1, Year 1, had a one-year term and a 6 percent annual interest rate. Required: Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Note: In the Cash Flow column, use OA to designate operating activity, IA for Investment activity, FA for financing activity, and NC for net change in cash. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require an input-leave cells blank if there is no corresponding input needed. Balance Sheet Income Statement Event Number Assets Liabilities Stockholders' Equity Statement of Cash Net Cash Notes Payable Interest Payable Common Retained Revenue Expenses Flows Income Stock Earnings L + 2 Total 0 . . 01+ 4