Question

Colton Enterprises experienced the following events for Year 1, the first year of operation:

1. Acquired $37,000 cash from the issue of common stock.
2. Paid $12,200 cash in advance for rent. The payment was for the period April 1, Year 1, to March 31, Year 2.
3. Performed services for customers on account for $76,000.
4. Incurred operating expenses on account of $36,000.
5. Collected $58,500 cash from accounts receivable.
6. Paid $23,000 cash for salary expense.
7. Paid $28,800 cash as a partial payment on accounts payable.

Adjusting Entries

8. Made the adjusting entry for the expired rent. (See Event 2.)
9. Recorded $2,800 of accrued salaries at the end of Year 1.

Events for Year 2

1. Paid $2,800 cash for the salaries accrued at the end of the prior accounting period.
2. Performed services for cash of $25,000.
3. Purchased $3,000 of supplies on account.
4. Paid $11,100 cash in advance for rent. The payment was for one year beginning April 1, Year 2.
5. Performed services for customers on account for $92,000.
6. Incurred operating expenses on account of $43,500.
7. Collected $91,000 cash from accounts receivable.
8. Paid $41,000 cash as a partial payment on accounts payable.
9. Paid $31,700 cash for salary expense.
10. Paid a $11,000 cash dividend to stockholders.

Adjusting Entries

11. Made the adjusting entry for the expired rent. (Hint: Part of the rent was paid in Year 1.)
12. Recorded supplies expense. A physical count showed that $550 of supplies were still on hand.

g. Repeat parts a through f for Year 2. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Statement of Cash Flows only, items to be deducted must be indicated with a negative amount. )

Answer is not complete. COLTON ENTERPRISES Statement of Cash Flows For the Year Ended December 31, Year 2 Cash flows from operating activities: Received from customers Paid for expenses 0 0 Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities Paid for dividends $(11,000) Net cash flow from financing activities Net change in cash Plus: Beginning cash balance Ending cash balance (11,000) (11,000) 31,500 $ 20,500

Answer 1

Credit Calculation Year 2 Date Account 1 Salaries Payable Cash Debit $ 2,800 $ 2,800 $ 25,000 2 Cash Service Revenue $ 25,000 $ 3,000 3 Supplies Accounts Payable $ 3,000 $ 11,100 4 Prepaid Rent Cash $ 11,100 $ 92,000 5 Accounts Receivable Service Revenue $ 92,000 $ 43,500 6 Operating Expenses Accounts Payable $ 43,500 $ 91,000 7 Cash Accounts Receivable $ 91,000 $ 41,000 8 Accounts Payable Cash $ 41,000 $ 31,700 9 Salaries Expenses Cash $ 31,700 $ 11,000 $ 11,000 10 Dividends Cash Adjusting entries 11 Rent Expenses Prepaid Rent $ 11,375 =(12,200/12*3)+(11,100/12*9) $ 11,375 $ 2,450 =3,000-550 $ 2,450 12 Supplies Expenses Supplies Closing entries 13 Service Revenue Retained Earnings $ 117,000 $ 117,000 $ 89,025 14 Retained Earnings Operating Expenses Salaries Expenses Rent Expenses Supplies Expenses $ 43,500 $ 31,700 $ 11,375 $ 2,450 $ 11,000 15 Retained Earnings Dividends $ 11,000

Credit Date Date Credit Date Credit Colton Enterprises T Accounts Date Debit Date Cash Year 1 1 $ 37,000 5 $ 58,500 Debit Date Credit Accounts Receivable Debit Date Prepaid Rent Debit Date Supplies Year 1 Year 1 3 Year 1 2 $ 76,000 5 $ 58,500 $ 12,200 8 $ 9,150 2 6 7 $ 12,200 $ 23,000 $ 28,800 $ 31,500 $ 17,500 $ 3,050 $ - Bal. Year 2 Bal. Year 2 Bal. Year 2 Bal. Year 2 5 $ 92,000 7 $ 91,000 4 $ 11,100 3 $ 3,000 2 $ 25,000 7 $ 91,000 1 $ 2,800 4 $ 11,100 8 $ 41,000 9 $ 31,700 10 $ 11,000 11 $ 11,375 12 $ 2,450 Bal. Bal. $ Bal. $ 18,500 Salaries Payable 2,775 Common Stock Bal. $ 49,900 Accounts Payable Year 1 7 $ 28,800 4 $ 550 Retained Earnings Year 1 Year 1 $ 36,000 9 $ 2,800 Year 1 11 1 $ 37,000 $ 70,950 10 $ 76,000 Bal. $ 7,200 Bal. $ 2,800 Bal. $ 37,000 Bal. $ 5,050 Year 2 Year 2 Year 2 8 $ 41,000 1 $ 2,800 Year 2 14 15 13 3 $ 3,000 6 $ 43,500 $117,000 $ 89,025 $ 11,000 $ 12,700 Bal. $ 37,000 Bal. $ 22,025 Bal. Dividends Serivce Revenue Year 1 Year 1 3 $ 76,000 10 $ 76,000 $ . Bal. $ . Bal. Year 2 Year 2 10 $ 11,000 2 $ 25,000 5 $ 92,000 15 $ 11,000 13 $117,000 Bal. S - $ Bal. Salaries Expenses Operating Expenses Rent Expenses Supplies Expenses Year 1 Year 1 4 Year 1 6 9 Year 1 8 $ 36,000 $ 9,150 $ 23,000 $ 2,800 11 $ 36,000 11 $ 25,800 11 $ 9,150 $ $ $ - $ Bal. Year 2 Bal. Year 2 . Bal. Year 2 11 Bal. Year 2 12 6 $ 43,500 9 $ 31,700 $ 11,375 $ 2,450 14 $ 43,500 14 $ 31,700 14 $ 11,375 14 $ 2,450 Bal. $ Bal. $ Bal. $ . Bal. $-

Adjusted TB Year 2 Debit Credit 49,900 18,500 2,775 550 12,700 Colton Enterprises Trial Balance Cash Accounts Receivable Prepaid Rent Supplies Accounts Payable Salaries Payable Common Stock Retained Earnings Dividends Service Revenue Operating Expenses Salaries Expenses Rent Expenses Supplies Expenses Totals 37,000 5,050 11,000 117,000 43,500 31,700 11,375 2,450 171,750 171,750

117,000 Colton Enterprises Income Statement For year ended Dec 31, Year 2 Service Revenue Operating expenses Operating Expenses Salaries Expenses Rent Expenses Supplies Expenses Total Operating expenses Net Income 43,500 31,700 11,375 2,450 89,025 27,975 Statement of Changes in Stockholders Equity For year ended Dec 31, Year 2 Beginning common Stock Issue of common stock Ending common Stock 37,000 37,000 Beginning Retained Earnings Net Income Less: Dividends Ending Retained Earnings Total Stockholders Equity 5,050 27,975 (11,000) 22,025 59,025

Colton Enterprises Balance Sheet As of Dec 31, Year 2 Assets Cash Accounts Receivable Prepaid Rent Supplies Total Assets 49,900 18,500 2,775 550 71,725 Liabilties and Stockholders Equity Liabilties Accounts Payable Salaries Payable Total Liabilities 12,700 12,700 Stockholders Equity Common Stock Retained Earnings Total Stockholders Equity Total Liabilities & Stockholders Equity 37,000 22,025 59,025 71,725

Colton Enterprises Statement of cashflows For year ended Dec 31, Year 2 Cashflows from operating activities Received from customers Paid for expenses Net Cashflows from operating activities 116,000 (86,600) Calculation 25000+91000 2800+11100+41000+31700 29,400 Cashflows from investing activities (11,000) Cashflows from financing activities Dividends paid Net Cashflows from financing activities Net change in cash Beginning cash balance Ending cash balance (11,000) 18,400 31,500 49,900

Post-Closing TB Year 2 Debit Credit 49,900 18,500 2,775 550 12,700 Colton Enterprises Trial Balance Cash Accounts Receivable Prepaid Rent Supplies Accounts Payable Salaries Payable Common Stock Retained Earnings Dividends Service Revenue Operating Expenses Salaries Expenses Rent Expenses Supplies Expenses Totals 37,000 22,025 71,725 71,725