The Candle Shop experienced the following events during its first year of operations: 1. Acquired cash by issuing common stock. 2 Paid a cash dividend to the stockholders. 3. Paid cash for operating expenses. 4. Borrowed cash from a bank. 5. Provided services and collected cash. 6. Purchased land with cash. 7. Determined that the market value of the land is higher than the historical cost Required a. Indicate whether each event is an asset source, use, or exchange transaction. b. Use a horizontal statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. Indicate whether the event increases (I) or decreases (D). or, if there is no effect, leave the cell blank. Also, in the Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction is shown as an example. (Not all cells requlre Input. If a transaction has no Impact, leave the cell blank.)
The Candle Shop experienced the following events during its first year of operations: 1. Acquired cash by issuing common stock. 2 Paid a cash dividend to the stockholders. 3. Paid cash for operating expenses. 4. Borrowed cash from a bank. 5. Provided services and collected cash. 6. Purchased land with cash. 7. Determined that the market value of the land is higher than the historical cost Required a. Indicate whether each event is an asset source, use, or exchange transaction. b. Use a horizontal statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. Indicate whether the event increases (I) or decreases (D). or, if there is no effect, leave the cell blank. Also, in the Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction is shown as an example. (Not all cells requlre Input. If a transaction has no Impact, leave the cell blank.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The Candle Shop experienced the folowing events during its first year of operations:
1. Acquired cash by issuing common stock.
2 Paid a cash dividend to the stockholders.
3. Paid cash for operating expenses.
4. Borrowed cash from a bank.
5. Provided services and collected cash.
6. Purchased land with cash.
7. Determined that the market value of the land is higher than the historical cost
Requlred
a. Indicate whether each event is an asset source, use, or exchange transaction.
b. Use a horizontal statements model to show how each event affects the balance sheet, income statement, and statement of cash
flows. Indicate whether the event increases (I) or decreases (D), or, if there is no effect, leave the cell blank. Also, in the Cash Flows
column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction is
shown as an example. (Not all cells requlre Input. If a transactlon has no Impact, leave the cell blank.)
Complete this question by entering your answers in the tabs below.
Required A
Required B
Indicate whether eac h event is an asset sourc e, us e, or exchange trans ac tion. (N ot all cells require input.)
Activity
classification
Event
1.
2.
3.
4
5.
6.
7.
Required B>
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Transcribed Image Text:dexternal
60%
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The Candle Shop experienced the following events during its first year of operations:
1. Acquired cnsh by issuing common stock
2 Poid a cosh dividend to the stockholders.
3. Poid cash for operating expenses.
4. Borrowed cash from a bank.
5. Provided services and collected cash.
6. Purchased land with cash.
7. Determined that the market volue of the land is higher than the historical cost.
Required
a. Indicote whether each event is an asset source, use, or exchange transoction.
b. Use o horizontal statements model to show how each event affects the bolance sheet, income statement, and statement of cash
flows, Indicate whether the event increases (I) or decreases (D), or, if there is no effect, leave the cell blank. Aso, in the Cash Flows
column, clossify the cash flows as operating activities (OA), investing octivities (IA), or financing activities (FA). The first tronsaction is
shown as an example. (Not all cells require Input. If a transaction has no Impact, leave the cell blank.)
Co mp lete this question by en tering your answers in the tabs below.
Required A
Required B
Use a horizo ntal state ments model to show how each event a ffe cts the balance sheet, income sta tement, and state me nt of cash flows. Indicate whether the event
increa ses (I) or de cre ases (D), or, if the re is no effect, lea ve the cell blank. Also, in the Cash Flows column, classify the cash flowS as operating activities (OA), investing
activities (IA), or financing activities (FA). The first transaction is shownas an exam ple. (Not all ce lls will require input.)
Sho w IesS A
THE CANDLE SHOP
Honzo ntal statemen ts Model
In come Statement
statement of Cash Flows
Balance Sheet
stockh oid ers Equity
Common
stock
Ty pe of
Activity
Event
As sets
= Llablties +
Net
Effecton
Retained Revenue - Expense
Earnings
=
Income
Cash
No.
Notes
Payable
Cash
La nd
FA
1
2.
1+
4.
5.
< Required A
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