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 $75,000 cash from the issue of common stock. 2. Purchased $4,200 of supplies on account. 3. Purchased land that cost $48,000 cash. 4. Paid $4,200 cash to settle accounts payable created in Event 2. 5. Recognized revenue on account of $72,000. 6. Paid $36,000 cash for other operating expenses. 7. Collected $53,000 cash from accounts receivable, Information for 2018 Adjusting Entries 8. Recognized accrued salaries of $4,700 on December 31, 2018. 9. Had $1,700 of supplies on hand at the end of the accounting period.

Answer 1

Liabilties Interest Accounts Salaries Unearned Receivable = Payable Payable Revenue + Stockholders Equity Common Retained + Stock + Earnings + 75,000 + Calculation 4,200 + + + Alcorn Service Company 2018 Assets Accounts Prepaid Events Type Cash Receivable Supplies Rent Land 1 AS 75,000 2 AS 4,200 3 | AE (48,000) 48,000 AU (4,200) 72,000 | AU (36,000) 7 AE 53,000 (53,000) 8 CE 9 AU (2,500) Totals 39,800 19,000 1,700 48,000 (4,200) + + AS + + 72,000 (36,000) Service Revenue Other operating expenses + + + + 4,700 (4,700) (2,500) -4,200-1,700 28,800 Salaries expense Supplies expense 4,700 75,000 + + + + + + + 2019 Assets Liabilties + Stockholders Equity Accounts Prepaid Interest Accounts Salaries Unearned Common Retained Events Type Cash Receivable Supplies Rent Land Receivable = Payable Payable Revenue + Stock + Earnings Calculation Bal. 39,800 19,000 1,700 48,000 4,700 + 75,000 + 28,800 AS 35,000 + 35,000 + AU (4,700) (4,700) (8,100) 8,100 48,000 (48,000) 5 AS 9,300 9,300 + 2,500 2,500 47,000 47,000 Service Revenue 48,000 (48,000) (7,000) (7,000) Dividends 10 AU (34,500) (34,500) Other operating expenses 11 AU (6,750) (6,750) =8,100/12*10 Rent expense 12 CE (2,325) + 2,325 =9,300/12*3 Service Revenue 13 AU (2,400) (2,400) =1,700+2,500-1,800 Supplies expense 14 CE 5,400 (5,400) Salaries expense 15 AS 1,900 = Interest Revenue Totals 125,800 18,000 1,800 1,350 1,900 = 2,500 5,400 6,975 + 110,000 + 23,975 AS + + + + + + + + + + + + + 1,900 Simple explanation Asset source is increase in assets Asset use is decrease in assets Asset exchange is exchange of one asset for another asset Claims exchange is no change in asset, meaning exchange of liabilty for equity