Question

Yard Professionals Inc. experienced the following events in year 1, its first year of operation:

1. Performed services for $26,500 cash.

2. Purchased $7,200 of supplies on account.

3. A pyshical count on December 31, year 1, found that there was $1,510 of supplies on hand.

a. Record the events in general ledger accounts under an accounting equation. (Enter any decreases to account balances with a minus sign.) YARD PROFESSIONALS INC. Effect of Events on the Accounting Equation for Year 1 Assets = Liabilities Event Accounts Cash Supplies - Payable 1. Provided service 2. Purchased supplies 3. Used supplies Totals Stockholders Equity Retained Earnings b. Prepare an income statement, balance sheet, and statement of cash flows for the Year 1 accounting period. YARD PROFESSIONALS INC. Income Statement For the Year Ended December 31, Year 1

Answer 1

(a) YARD PROFESSIONALS INC effects of events on the accounting equation too teus a ASSets Liabilities stockholders Event equity Accounts Retained cash supplies payable Earnings 1. Provided service 26500 0 - 0 $ 26500 1. 2. Purchased supplies o 7200 to 7200 t o 3. Used supplies (5690) (5690) Torals 5 26500 $ 15101 $7200 lt 1520,810 Explanaton : 7 supplies Expense = supply purchased - supply on hand. $ 7200 - $ 1510 S5690 XARD PROFESSIONALS INC. Income statement for the year Ended Dec 31 year I Revenue $ 26500 Expense (5690) Net Income 1 $ 20,810

col YARD PROFESSIONALSING Balance sheet AS OF December 31 year I Assets : cash 5 26 500 supplies 1510 TOTAL Assets 128010 Liabilities Accounts payable TOTCH liabilities 7200 $ 7200 420810 stockholder's equity : Retained Eomings TOTOL stockholder's Equity TOTO liability and stockholders Equity s 20810 $. 28,010 1 YARD PROFESSIONALS INC. statement of cash flows. for the year Ended December 31, year I cash flow from operating Activities : I cash receipt from Revenue 26500 Net cash flow from operating Activities! $ 26500 cash flow from Investing activities cash flow from financing Activitie nes change in cash 265oo plys: Beginning cash balance Ending cash balance is 26500 ( supplies 1s 1510

(d) supplies expense $0 - Supplies Expense balance is $.0 because the expense account was closed to aetanea eamings at the end of year I.