Question

Required information

[The following information applies to the questions displayed below.]

Alcorn Service Company was formed on January 1, 2018.

Events Affecting the 2018 Accounting Period

1. Acquired $80,000 cash from the issue of common stock.

2. Purchased $5,200 of supplies on account.

3. Purchased land that cost $58,000 cash.

4. Paid $5,200 cash to settle accounts payable created in Event 2.

5. Recognized revenue on account of $82,000.

6. Paid $41,000 cash for other operating expenses.

7. Collected $58,000 cash from accounts receivable.

Information for 2018 Adjusting Entries

8. Recognized accrued salaries of $5,200 on December 31, 2018.

9. Had $2,200 of supplies on hand at the end of the accounting period.

  

Events Affecting the 2019 Accounting Period

1. Acquired $40,000 cash from the issue of common stock.

2. Paid $5,200 cash to settle the salaries payable obligation.

3. Paid $9,600 cash in advance to lease office space.

4. Sold the land that cost $58,000 for $58,000 cash.

5. Received $10,800 cash in advance for services to be performed in the future.

6. Purchased $3,000 of supplies on account during the year.

7. Provided services on account of $52,000.

8. Collected $53,000 cash from accounts receivable.

9. Paid a cash dividend of $6,000 to the stockholders.

10. Paid other operating expenses of $39,500.

  

Information for 2019 Adjusting Entries

11. The advance payment for rental of the office space (see Event 3) was made on March 1 for a one-year term.

12. The cash advance for services to be provided in the future was collected on October 1 (see Event 5). The one-year contract started on October 1.

13. Had $2,300 of supplies remaining on hand at the end of the period.

14. Recognized accrued salaries of $5,900 at the end of the accounting period.

15. Recognized $2,400 of accrued interest revenue.

Required

Identify each event affecting the 2018 and 2019 accounting periods as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). Record the effects of each event under the appropriate general ledger account headings of the accounting equation. I need help with number 11 & 12.

Also,

1. b-1. Prepare an income statement for 2018 and 2019.

2. b-2. Prepare the statement of changes in stockholders’ equity for 2018 and 2019.

3. b-3. Prepare the balance sheet for 2018 and 2019.

4. b-4. Prepare the statement of cash flows for 2018 and 2019, using the vertical statements model.

Type ALCORN SERVICE COMPANY Accounting Equation for 2019 Assets Supplies Prepaid Interest Land Rent Receivable 7,400 0 58,000 Event of Event Cash Accounts Payable Liabilities Salaries Payable 5,200 + Unearned, Revenue 0 + + Stockholders' Equity Common Retained Stock Earnings 88,000 36,00 40,000 | + Bal. 1. 1 2. Accounts Receivable 33,800 24,000 40,000 (5,200) (9,600) 58,000 10,800 (5,200) + 9,600 + (58,000)| + 10,800 + 5. 6. 7. 3,000 1 = 3,000 + I 52,00 + AS AU AE AE AS AS AS AE AU AU AU AE AU AE AS 52,000 (53,000) L + (53,000) (6,000) (39,500) 9. 10. + (6,000 (39,500 I + 11. + 12. + 13. (2,300) + 5,900 + (2,300 (5,901 2,40 36,70 + 15. Totals 29,300 23,000 8,100 9,600 58,000 (58,000) = 3,000 5,900 10,800 + + 128,000

Answer 1

Part A 1

	Alcorn Service Company Accounting Equation for 2018
		Assets		=	Liabilities	+	Stockholders’ Equity
Event	Type of Event	Cash	Accounts Receivables	Supplies	Prepaid Rent	Land	Interest receivable		Accounts Payable	Salaries Payable	Unearned Revenue		Common Stock	Retained Earnings
1.	AS	80000											80000
2.	AS			5200					5200
3.	AE	(58000)				58000
4.	AU	(5200)							(5200)
5.	AS		82000											82000
6.	AU	(41000)												(41000)
7.	AE	58000	(58000)
8.	CE									5200				(5200)
9.	AU			(3000)										(3000)
Totals		33800	24000	2200		58000			0	5200			80000	32800

5200-3000 = $2200

	Alcorn Service Company Accounting Equation for 2019
		Assets		=	Liabilities	+	Stockholders’ Equity
Event	Type of Event	Cash	Accounts Receivables	Supplies	Prepaid Rent	Land	Interest receivable		Accounts Payable	Salaries Payable	Unearned Revenue		Common Stock	Retained Earnings
Bal.		33800	24000	2200		58000			0	5200			80000	32800
1.	AS	40000											40000
2.	AU	(5200)								(5200)
3.	AE	(9600)			9600
4.	AE	58000				(58000)
5.	AS	10800									10800
6.	AS			3000					3000
7.	AS		52000											52000
8.	AE	53000	(53000)
9.	AU	(6000)												(6000)
10.	AU	(39500)												(39500)
11.	AU		(8000)											(8000)
12.	CE										(2700)			2700
13.	AU			(2900)										(2900)
14.	CE									5900				(5900)
15.	AS						2400							2400
Totals		135300	15000	2300	9600	0	2400		3000	5900	8100		120000	27600

9600*10/12 = 8000

10800*3/12 = 2700

2200+3000-2300 = 2900

Part B 1

Alcorn Service Company Income Statements For the Years Ended December 31, Year 1 and Year 2
	Year 1	Year 2
Service Revenue	82000	54700
Interest revenue		2400
Total Revenue	82000	57100
Expenses
Operating Expenses	(41000)	(39500)
Supplies Expense	(3000)	(2900)
Salaries Expense	(5200)	(5900)
Rent Expense	0	(8000)
Total Expenses	(49200)	(56300)
Net Income (Loss)	$32800	$800

Part B 2 Alcorn Service Company Statements of Changes in Stockholders' Equity For the Years Ended December 31, Year 1 and Year 2 Year 1 Beginning Common Stock Plus: Stock Issued Ending Common Stock Year 2 80000 40000 120000 80000 80000 32800 Beginning Retained Earnings Plus/Less: Net Income (Loss) Less: Dividends Ending Retained Earnings 32800 800 (6000) 27600 32800 Total Stockholders' Equity 112800 147600

Part B 3 Alcorn Service Company Balance Sheets As of December 31, Year 1 and Year 2 Year 1 Year 2 33800 24000 2200 Assets Cash Accounts Receivable Supplies Prepaid Rent Land Interest receivable Total Assets 135300 15000 2300 9600 58000 2400 164600 118000 Liabilities Accounts Payable Salaries Payable Unearned Revenue Total Liabilities 0 5200 3000 5900 8100 17000 5200 Stockholders' Equity Common Stock Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity 80000 32800 112800 118000 120000 27600 147600 164600

Part B 4 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 Receipts from Customers Cash Payments for Expense Net Cash Flow from Operating Activities 58000 (46200) 11800 63800 (54300) 9500 (58000) Cash Flows From Investing Activities: Cash Payment for Land Cash Proceeds from Sale of Land Net Cash Flow From Investing Activities 58000 58000 (58000) 80000 Cash Flows From Financing Activities: Cash Receipts from Stock Issue Cash Payment for Dividends Net Cash Flow From Financing Activities 40000 (6000) 34000 80000 8400 Net Change in Cash Plus: Beginning Cash Balance Ending Cash Balance 101500 33800 135300 33800