Chapter 1, Problem 1.2E

Falcon Incorporated has the following transactions with Wildcat Corporation.

Identify account classifications and business activities (LO1–2)

Flip Side of E1–3

Transactions	Falcon’s Related Account
1. Falcon purchases common stock of Wildcat. 2. Falcon borrows from Wildcat by signing a note. 3. Wildcat pays dividends to Falcon. 4. Falcon provides services to Wildcat 5. Falcon pays interest to Wildcat on borrowing.	Investment Notes payable Dividend revenue Service revenue Interest expense

  Required:

  1.    For each transaction, indicate whether Falcon would classify each account in the balance sheet as (a) an asset, (b) a liability, or (c) stockholders’ equity; in the income statement as (d) a revenue or (e) an expense; or in the statement of stockholders’ equity as (f) a dividend.

  2.    Classify the type of activity as financing, investing, or operating.