Question

On May 1, 2018, Love Corporation declared a $68,900 cash dividend to be paid on May 31 to shareholders of record on May 15. Required: Record the events occurring on May 1 and May 31 in a horizontal statements model. In the Cash Flow column, indicate whether the item is an operating activity (OA), Investing activity (IA), or financing activity (FA). If an element was not affected by the event, leave the cell blank. (Enter any decreases to account balances with a minus sign.) Balance Sheet Liabilities Common Stock LOVE CORPORATION Horizontal Statements Model Income Statement Retained Earnings Revenue - Expense Statement of Cash Flow Date Assets Net Income May 1 May 15 May 31

Answer 1

1
	Balance Sheet				Income Statement
	Assets	Liabilities	Common Stock	Retained Earnings	Revenue	Expense	Net income	Statement of Cash flows
May 1		68900		-68900
May 15
May 31	-68900	-68900						-68900	FA

2

a
Cost of goods sold for July	402800	=380000*1.06
Add: Desired ending inventory	20000
Less: Beginning inventory	-19000
Budgeted purchases	403800
b
Payment for June purchases	29000
Payment for July purchases	302850	=403800*75%
Cash payments	331850