Question

Yard Professionals Inc, experienced the following events in 2018, its first year of operation: 1. Performed counseling services for $22,500 cash. 2. Purchased $7,000 of supplies on account. 3. A physical count on December 31, 2018, found that there was $1,300 of supplies on hand. Required Based on this information alone: a. Record the events under an accounting equation. b. Prepare an income statement, balance sheet, and statement of cash flows for the 2018 accounting period. c. What is the balance in the Supplies account as of January 1, 2019? d. What is the balance in the Supplies Expense account as of January 1, 2019? Complete this question by entering your answers in the tabs below. Req A Req B1 Inc Stmt Req B2 Bal Sheet Req B3 CF Stmt Reqs C and D Record the events under an accounting equation. (Enter any decreases to account balances with a minus sign.) YARD PROFESSIONALS INC. Effect of Events on the Accounting Equation Assets Liabilities Event Stockholders' Equity Retained Earnings Cash Supplies = Accounts + 1. Performed counseling services 2. Purchased supplies 3. Used supplies Totals + +

Answer 1

Requirement A:

YARD PROFESSIONALS INC.
Effect of Events on the Accounting Equation
Event		Assets		=	Liabilities	+	Stockholders' Equity
		Cash	Supplies	=	Accounts Payable	+	Retained Earnings
1	Performed counseling services	$22,500		=		+	$22,500
2	Purchased supplies		$7,000	=	$7,000	+
3	Used supplies		($5,700)	=		+	($5,700)
Totals		$22,500	$1,300	=	$7,000	+	$16,800

Requirement B1:

YARD PROFESSIONALS INC.
Income Statement
For the Year Ended December 31,2018
Service revenue	$22,500
Less: Supplies expense	($5,700)
Net income	$16,800

Requirement B2:

YARD PROFESSIONALS INC.
Balance Sheet
As of December 31,2018
Assets
Cash	$22,500
Supplies	$1,300
Total assets		$23,800
Liabilities
Accounts payable	$7,000
Total liabilities		$7,000
Stockholders' Equity
Retained earnings	$16,800
Total stockholders' equity		$16,800
Total liabilities and stockholders' equity		$23,800

Requirement B3:

YARD PROFESSIONALS INC.
Statement of Cash flows
For the Year Ended December 31,2018
Cash flows from operating activities:
Cash received for services	$22,500
Net cash flows from operating activities		$22,500
Cash flows from investing activities		$0
Cash flows from financing activities		$0
Net change in cash		$22,500
Beginning cash balance		$0
Ending cash balance		$22,500

Requirement C&D:

C	Supplies on Jan 1,2019	$1,300
D	Supplies Expense on Jan 1,2019	$0

Explanation:

Supplies on Jan 1,2019 is ending balance of Dec 31,2018. But,

Supplies expense is expense account and this account closes at the end of the year. So that it doesn't has opening balance. Hence, supplies expense on Jan 1,2019 is $0.