The Bruce Spruce Co. experienced the following events during its first year of operations, Year 1: 1.

Question:

The Bruce Spruce Co. experienced the following events during its first year of operations, Year 1:
1. Acquired $75,000 cash by issuing common stock.
2. Earned $48,000 cash revenue.
3. Paid $34,000 cash for operating expenses.
4. Borrowed $20,000 cash from a bank.
5. Paid $38,000 cash to purchase land.
6. Paid a $2,000 cash dividend.


Required
a. 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. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction is shown as an example.

Balance Sheet Income Statement Stk. Equity Liab. Statement of Cash Flows Assets Event + Land Notes Pay. + Com. Stk. + Re


b. Prepare a formal income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Related Book For  book-img-for-question

Introductory Financial Accounting for Business

ISBN: 978-1260299441

1st edition

Authors: Thomas Edmonds, Christopher Edmonds

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