The Shoe Shop experienced the following events during its first year of operations, 2008.

1. Acquired cash by issuing common stock.

2. Provided services and collected cash.

3. Borrowed cash from a bank.

4. Paid cash for operating expenses.

5. Purchased land with cash.

6. Paid a cash dividend to the stockholders.

7. Determined the market value of the land to be higher than the historical cost.

Required:

a. Indicate whether each event is an asset source, use, or exchange transaction.

b. Use a horizontal statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. Indicate whether the event increases (I), decreases (D), or does not affect (NA) each element of the financial statements. Also, in the 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.

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Balance Sheet Income Statement Event Statement of No. Cash+Land == N. Pay. + Com. Stk. + Ret. Earn. Rev. - Exp. = Net Inc. Cash Flows 1. + NA NA + NA NA - NA = NA FA