Question

Rainey Enterprises loaned $20,000 to Small Co. on June 1, Year 1, for one year at 6 percent interest.

Required
Show the effects of the following transactions in a horizontal statements. In the Statement of Cash Flows column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA). (Do not round intermediate calculations. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells in the "Statement of Cash Flows" column may require an input - leave cells blank if there is no corresponding input needed.)

1. (1) The loan to Small Co.
2. (2) The adjustment at December 31, Year 1.
3. (3) The adjustment and collection of the note on June 1, Year 2.
   Rainey Enterprises loaned $20,000 to Small Co. on June 1, Year 1, for one year at 6 percent interest. Required Show the effects of the following transactions in a horizontal statements. In the Statement of Cash Flows column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA). (Do not round intermediate calculations. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells in the "Statement of Cash Flows" column may require an input - leave cells blank if there is no corresponding input needed.) (1) The loan to Small Co. (2) The adjustment at December 31, Year 1. (3) The adjustment and collection of the note on June 1, Year 2. Date RAINEY ENTERPRISES Horizontal Statements Model Assets = Equity Income Statement Notes . Interest Retained Revenue - Expense Receivable * Receivable - Net Income Earnings 20,000+ 700 700 700 ſ 700 500 500 500 Statement of Cash Flow Cash (20,000)| + (20,000) IA + 1. 6/1/Year 1 2. 12/31/Year 1 3. 6/1/Year 2 6/1/Year 2 6/1/Year 2 + + +
   

Answer 1

Solution:

Rainey Enterprises
Horizontal Statements Model
Date	Assets	=	Liab.	+	Equity	Income Statement	Statement of cash flow
Cash +	Notes Receivable +	Interest Receivable	=			Retained Earnings	Revenue -	Expense   =	Net Income
1	6/1/year 1	-20000	20000									-20000	IA
2	12/31/year 1			700				700	700		700	0	NA
3	6/1/Year 2			500				500	500		500	0	NA
	6/1/year 2	21200	-20000	-1200								20000	IA
												1200	OA