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The transactions in this problem are identical to those in E1 2 but now with a focus on Wildcat Transactions Wi

The transactions in this problem are identical to those in E1–2, but now with a focus on Wildcat.

Transactions                                                                                       Wildcat’s Related Account

1. Falcon purchases common stock of Wildcat.                    Common stock

2. Falcon borrows from Wildcat by signing a note.             Notes receivable

3. Wildcat pays dividends to Falcon.                                         Dividend

4. Falcon provides services to Wildcat.                                    Service fee expense

5. Falcon pays interest to Wildcat on borrowing.                Interest revenue

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

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

E1–2

Falcon Incorporated has the following transactions with Wildcat Corporation.

Transactions                                                                                       Falcon’s Related Account

1. Falcon purchases common stock of Wildcat.                    Investment

2. Falcon borrows from Wildcat by signing a note.             Notes payable

3. Wildcat pays dividends to Falcon.                                         Dividend revenue

4. Falcon provides services to Wildcat.                                    Service revenue

5. Falcon pays interest to Wildcat on borrowing. Interest expense

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

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

Apr 25 2020 View more View Less

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