Question

Exercise 2-9 Supplies on financial statements LO 2-3, 2-6 Yard Professionals Inc. experienced the following events in 2018, its first year of operation: 1. Performed counseling services for $19,500 cash. 2. Purchased $6,600 of supplies on account. 3. A physical count on December 31, 2018, found that there was $1,280 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.

Answer 1

Answer-a-

YARD PROFESSIONALS INC. Effect of events on the Accounting equation
Event	Assets	=	Liabilities	+	Stockholders’ Equity
	Cash	Supplies	=	Accounts payable	+	Retained earnings
Provided service	$19,500					$19,500
Purchased supplies		$6,600		$6,600
Used supplies		($5,320)				($5,320)
Total	$19,500	$1,280	=	$6,600	+	$14,180

B-

Calculation of net income:

"YARD PROFESSIONALS INC. Income statement For the year ended December 31, 2018
Particulars	Amount	Amount
Revenue recognized on account		$19,500
Less: Expense		$5,320
Net income		$14,180

YARD PROFESSIONALS INC. Balance Sheet As of December 31, 2018
Assets;	Amount	Amount
Cash	$19,500
Supplies	$1,280
Total assets		$20,780
Liabilities;
Accounts payable	$6,600
Total liabilities		$6,600
Stockholders’ equity;
Retained earnings	$14,180
Total stockholders’ equity		$14,180
Total liability and stockholders’ equity		$20,780

YARD PROFESSIONALS INC. Statement of cash flows For the year ended December 31, 2018
Particulars	Amount	Amount
Cash flow from operating activity;
Cash Received from Customers	$19,500
Net cash flow from operating act		$19,500
Cash flow from investing activities		$0
Cash flows from financing activities
Net change in cash		$19,500
Add: beginning cash balance		$0
Ending cash balance		$19,500

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