The following events apply to Lewis and Harper, a public accounting firm, for the Year 1 accounting period: Performed $104,500 of services for clients on account. Performed $57,000 of services for cash. Incurred $62,000 of other operating expenses on account. Paid $23,500 cash to an employee for salary. Collected $71,000 cash from accounts receivable. Paid $26,000 cash on accounts payable. Paid an $7,000 cash dividend to the stockholders. Accrued salaries were $5,400 at the end of Year 1.
Required: Show the effects of the events on the financial statements using a horizontal statements model like the following one. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, NC for net change in cash and NA to indicate the element is not affected by the event. The first event is recorded as an example.