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 as follows.

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

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Balance Sheet Income Statement Assets Stk. Equity Statement of Cash Flows NRV Accts. Notes Int. Com. Ret. Event Çash Rec. Rec. + Rec. = Stk. + Earn. Rev. Exp. = Net Inc.