Chapter 5, Problem 26P

The following transactions apply to Hooper Co. for 2018, its first year of operations:

1. 1. Issued $60,000 of common stock for cash.
2. 2. Provided $90,000 of services on account.
3. 3. Collected $78,000 cash from accounts receivable.
4. 4. Loaned $20,000 to Mosby Co. on November 30, 2018. The note had a one-year term to maturity and a 6 percent interest rate.
5. 5. Paid $26,000 of salaries expense for the year.
6. 6. Paid a $2,000 dividend to the stockholders.
7. 7. Recorded the accrued interest on December 31, 2018 (see item 4).
8. 8. Estimated that 1 percent of service revenue will be uncollectible.

Required

1. a. Show the effects of these transactions in a horizontal statements model like the one shown as follows.

1. b. Prepare the income statement, balance sheet, and statement of cash flows for 2018.