Recording events in a horizontal statements modelDudley Company was started January 1, 201...

Recording events in a horizontal statements model

Dudley Company was started January 1, 2011, and experienced the following events during its first year of operation.

1. Acquired $52,000 cash from the issue of common stock.

2. Borrowed $20,000 cash from National Bank.

3. Earned cash revenues of $42,000 for performing services.

4. Paid cash expenses of $23,000.

5. Paid a $6,000 cash dividend to the stockholders.

6. Acquired $10,000 cash from the issue of additional common stock.

7. Paid $ 10,000 cash to reduce the principal balance of the bank note.

8. Paid $45,000 cash to purchase land.

9. Determined that the market value of the land is $55,000.

Required

a. Record the preceding transactions in the 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. Determine the amount of total assets that Dudley would report on the December 31, 2011, balance sheet.

c. Identify the asset source transactions and related amounts for 2011.

d. Determine the net income that Dudley would report on the 2011 income statement.

Explain , why dividends do not appear on the income statement.

e. Determine the net cash flows from operating activities, investing activities, and financing activities that Dudley would report on the 2011 statement of cash flows.

f. Determine the percentage of assets that were provided by investors, creditors, and earnings.

g. What is the balance in the Retained Earnings account immediately after Event 3 is recorded?