The transactions in this problem are identical to those in E1–2, but now with a focus on Wildcat.

Transactions

1. Falcon purchases common stock of Wildcat.

2. Falcon borrows from Wildcat by signing a note.

3. Wildcat pays dividends to Falcon.

4. Falcon provides services to Wildcat.

5. Falcon pays interest to Wildcat on borrowing.

Wildcat’s Related Account

Common stock

Notes receivable

Dividend

Service fee expense

Interest revenue

Required:

1. For each transaction, indicate whether Wildcat would classify the related account as an (a) asset, (b) liability, or (c) stockholders’ equity to be reported in the balance sheet; a (d) revenue or (e) expense to be reported in the income statement; or an (f) dividend to be reported in the statement of stockholders’ equity.

2. Classify the type of activity as financing, investing, or operating.