Record events in the horizontal statements modelBailey’s Boat Shop was started in 2012. Du...

Record events in the horizontal statements model

Bailey’s Boat Shop was started in 2012. During 2012, the company (1) acquired $5,000 cash from the issue of common stock, (2) earned cash revenue of $22,000, (3) paid cash expenses of $9,300, and (4) paid an $800 cash dividend to the stockholders.

Required

a. Record these four events in a horizontal statements model. Also, in the Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first event is shown as an example.

b. Why is net income different from the net increase in cash for this business?