Question

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Alcorn Service Company was formed on January 1, 2018.

Events Affecting the 2018 Accounting Period

1. Acquired $78,000 cash from the issue of common stock.

2. Purchased $4,800 of supplies on account.

3. Purchased land that cost $54,000 cash.

4. Paid $4,800 cash to settle accounts payable created in Event 2.

5. Recognized revenue on account of $78,000.

6. Paid $39,000 cash for other operating expenses.

7. Collected $56,000 cash from accounts receivable.

Information for 2018 Adjusting Entries

8. Recognized accrued salaries of $5,000 on December 31, 2018.

9. Had $2,000 of supplies on hand at the end of the accounting period.

  

Events Affecting the 2019 Accounting Period

1. Acquired $38,000 cash from the issue of common stock.

2. Paid $5,000 cash to settle the salaries payable obligation.

3. Paid $9,000 cash in advance to lease office space.

4. Sold the land that cost $54,000 for $54,000 cash.

5. Received $10,200 cash in advance for services to be performed in the future.

6. Purchased $2,800 of supplies on account during the year.

7. Provided services on account of $50,000.

8. Collected $51,000 cash from accounts receivable.

9. Paid a cash dividend of $4,000 to the stockholders.

10. Paid other operating expenses of $37,500.

  

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 $2,100 of supplies remaining on hand at the end of the period.

14. Recognized accrued salaries of $5,700 at the end of the accounting period.

15. Recognized $2,200 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.

Alcorn Service Company was formed on January 1, 2018. Events Affecting the 2018 Accounting Period 1. Acquired $78,000 cash from the issue of common stock. 2. Purchased $4,800 of supplies on account. 3. Purchased land that cost $54,000 cash. 4. Paid $4,800 cash to settle accounts payable created in Event 2. 5. Recognized revenue on account of $78,000. 6. Paid $39,000 cash for other operating expenses. 7. Collected $56,000 cash from accounts receivable. Information for 2018 Adjusting Entries 8. Recognized accrued salaries of $5,000 on December 31, 2018. 9. Had $2,000 of supplies on hand at the end of the accounting period. Events Affecting the 2019 Accounting Period 1. Acquired $38,000 cash from the issue of common stock. 2. Paid $5,000 cash to settle the salaries payable obligation. 3. Paid $9,000 cash in advance to lease office space. 4. Sold the land that cost $54,000 for $54,000 cash. 5. Received $10,200 cash in advance for services to be performed in the future. 6. Purchased $2,800 of supplies on account during the year. 7. Provided services on account of $50,000. 8. Collected $51,000 cash from accounts receivable. 9. Paid a cash dividend of $4,000 to the stockholders. 10. Paid other operating expenses of $37,500.

Answer 1

Answer:

ALCORN SERVICE COMPANY Accounting Equation for 2018 Assets Laibilities Stockholder's Equity Event Type of Event Cash Account Receivable Supplies Prepaid Rent Land Accounts Salaries Unearned Payable Payable Revenue Common Stock Retained Earnings 1 $ 78,000 $ 78,000 4,800 4,800 54,000 AS AU AE AU AS AU AE (54,000) (4,800) (4,800) 78,000 78,000 (39,000) (39,000) 56,000 | | (56,000)| | | | | 5,000 T (2,800) $2,000 (5,000) (2,800) 31,200 Total $ 36,200 $ 22,000 $ - $ 54,000 $ $ 5,000 $ - $ 78,000$

ALCORN SERVICE COMPANY Accounting Equation for 2019 Assets Laibilities + Stockholder's Equity Event Type of Event Cash Account Receivable Supplies Prepaid Rent Land Interest Receivable Accounts Salaries Unearned Payable Payable Revenue Common Stock Retained Earnings $ 38,000 AS AU (5,000) AE $ 38,000 (5,000) (9,000) 54,000 10,200 L 1 2 3 4 5 6 7 9,000 (54,000) 10,200 AE AS AS AS 2,800 T T 2,800 50,000 50,000 (51,000) AE AU AU 51,000 (4,000) (37,500) (7,500) 9 10 11 12 13 14 (2,550) (4,000) (37,500) (7,500) 2,550 (700) (5,700) 2,200 (650) (700) 5,700 15 2,200 2,200 Total $ 97,700 $ (1,000) $ 2,100 $ 1,500 $(54,000) $ $ 2,800 $ 700$ 7,650 $ 38,000 $