Question

Events Affecting the Year 1 Accounting Period 1. Acquired $77,000 cash from the issue of common stock. 2. Purchased $4,600 of supplies on account. 3. Purchased land that cost $52,000 cash. 4. Paid $4,600 cash to settle accounts payable created in Event 2. 5. Recognized revenue on account of $76,000. 6. Paid $38,000 cash for other operating expenses. 7. Collected $55,000 cash from accounts receivable. Information for Year 1 Adjusting Entries 8. Recognized accrued salaries of $4,900 on December 31. Year 1. 9. Had $1,900 of supplies on hand at the end of the accounting period. DS Events Affecting the Year 2 Accounting Period 1. Acquired $37.000 cash from the issue of common stock. 2. Paid $4,900 cash to settle the salaries payable obligation. 3. Paid $8,700 cash in advance to lease office space. 4. Sold the land that cost $52,000 for $52,000 cash. 5. Received $9.900 cash in advance for services to be performed in the future, 6. Purchased $2,700 of supplies on account during the year. 7. Provided services on account of $49,000. 8. Collected $50,000 cash from accounts receivable. 9. Paid a cash dividend of $9,000 to the stockholders. 10. Paid other operating expenses of $36,500.

Answer 1

Alcorn Service Company Income Statements For the years ended December 31, Year 1 & Year 2
	Year 1	Year 2
Service Revenue	$ 76,000	$ 51,475
Interest Revenue	-	2,100
Total Revenue	76,000	53,575
Expenses
Salaries Expense	4,900	5,600
Supplies Expense	2,700	2,600
Rent Expense	-	7,250
Other Operating Expenses	38,000	36,500
Total Expenses	45,600	51,950
Net Income	$ 30,400	$ 1,625

Alcorn Service Company Statement of Changes in Stockholders Equity For the years ended Decembe 31, Year 1 and Year 2
	Year 1	Year 2
Beginning common stock	$ 0	$ 77,000
Plus: Stock issued	77,000	37,000
Ending common stock	77,000	114,000
Beginning retained earnings	0	30,400
Plus: Net Income	30,400	1,625
Less: Dividends	-	9,000
Ending retained earnings	30,400	23,025
Total stockholders equity	$ 107,400	$ 137,025

Alcorn Service Company Balance Sheet December 31, Year 1 and Year 2
	Year 1	Year 2
Assets
Cash	$ 37,400	$ 127,200
Accounts Receivable	21,000	20,000
Interest Receivable	-	2,100
Supplies	1,900	2,000
Prepaid Rent	0	1,450
Land	52,000	-
Total Assets	$ 112,300	$ 152,750
Liabilities
Accounts Payable	-	2,700
Salaries Payable	4,900	5,600
Unearned Revenue	-	7,425
Total Liabilities	4,900	15,725
Stockholders Equity
Common Stock	77,000	114,000
Retained Earnings	30,400	23,025
Total Stockholders Equity	107,400	137,025
Total Liabilities and Stockholders Equity	$ 112,300	$ 152,750

Alcorn Service Company Statements of Cash Flows For the years ended December 31, Year 1 and Year 2
	Year 1	Year 2
Cash Flows from Operating Activities
Cash received from customers	$ 55,000	$ 59,900
Cash paid to creditors for supplies	(4,600)
Cash paid for salaries		(4,900)
Cash paid for rent		(8,700)
Cash paid for other operating expenses	(38,000)	(36,500)
Net cash flow from Operating Activities	12,400	9,800
Cash Flows from Investing Activities
Cash paid for land	(52,000)
Proceeds from sale of land		52,000
Net cash flow from Investing Activities	(52,000)	52,000
Cash Flows from Financing Activities
Cash from issuance of common stock	77,000	37,000
Cash paid for dividends	-	(9,000)
Net cash flow from Financing Activities	77,000	28,000
Net change in cash	37,400	89,800
Beginning cash balance	0	37,400
Ending cash balance	$ 37,400	$ 127,200