Question

Cordell Inc. experienced the following events in 2018, its first year of operation:

1. Received $46,000 cash from the issue of common stock.

2. Performed services on account for $74,000.

3. Paid a $4,600 cash dividend to the stockholders.

4. Collected $52,000 of the accounts receivable.

5. Paid $46,000 cash for other operating expenses.

6. Performed services for $15,000 cash.

7. Recognized $1,600 of accrued utilities expense at the end of the year.

Required

1. a. & c. Identify the events that result in revenue or expense recognition and those which affect the statement of cash flows. In the Statement of Cash Flows column, use OA to designate operating activity, FA for financing activity, or IA for investing activity. If the element is not affected by the event, leave the cell blank.

2. b. Based on your response to Requirement a, determine the amount of net income reported on the 2018 income statement.

3. d. Based on your response to Requirement c, determine the amount of cash flow from operating activities reported on the 2018 statement of cash flows.

4. e. What is the before- and after-closing balance in the service revenue account?

5. f. What is the balance of the retained earnings account that appears on the 2018 balance sheet?
   Cordell Inc. experienced the following events in 2018, its first year of operation: 1. Received $46,000 cash from the issue of common stock. 2. Performed services on account for $74,000. 3. Paid a $4,600 cash dividend to the stockholders. 4. Collected $52,000 of the accounts receivable. 5. Paid $46,000 cash for other operating expenses. 6. Performed services for $15,000 cash. 7. Recognized $1,600 of accrued utilities expense at the end of the year. Required a. & c. Identify the events that result in revenue or expense recognition and those which affect the statement of cash flows. In the Statement of Cash Flows column, use OA to designate operating activity, FA for financing activity, or IA for investing activity. If the element is not affected by the event, leave the cell blank. b. Based on your response to Requirement a, determine the amount of net income reported on the 2018 income statement. d. Based on your response to Requirement c, determine the amount of cash flow from operating activities reported on the 2018 statement of cash flows. e. What is the before- and after-closing balance in the service revenue account? f. What is the balance of the retained earnings account that appears on the 2018 balance sheet?
   

Answer 1

None of the images are readable so the answer provided below is based only on the text provided in the question

a & c -

Transactions	Income/Expense Recognition	Cash Flows (AO/FA/IA)
Received $46,000 cash from the issue of common stock.	Not applicable	FA
Performed services on account for $74,000.	Revenue	Not applicable
Paid a $4,600 cash dividend to the stockholders.	Expense	FA
Collected $52,000 of the accounts receivable.	Not applicable	OA
Paid $46,000 cash for other operating expenses.	Expense	OA
Performed services for $15,000 cash.	Revenue	OA
Recognized $1,600 of accrued utilities expense at the end of the year.	Expense	Not applicable

b) Net income to be recorded in 2018 income statement = $ 74,000 + $ 15,000 = $ 89,000 (Note : The $ 52,000 collected of the accounts receivable is not included here as this is cash collected on already recognized revenue either of 2018 and/or prior year)

d) Cash Flow from Operating Activities as determined in requirement c above =  $ 52,000 + $ 15,000 - $ 46,000 = $ 21,000

e) Before closing balance of service revenue account will be $ 89,000 (74,000 + 15,000).

After - closing balance in service revenue account will be $ 0 as all credits in service revenue account will be transferred to income summary account

f) Retained Earnings

Retained Earnings for 2018	Amount
Net income for 2018 transferred from income summary account	$                  41,400
(74,000 + 15,000 - 46,000 - 1600)
Less : Dividend Paid	$                  (4,600)
Balance of Retained Earnings in 2018 balance sheet	$                  36,800