Yard Professionals Inc. experienced the following events in Year
1, its first year of operation:
Required
Based on this information alone:
a. Record the events in general ledger accounts
under an accounting equation.
b. Prepare an income statement, balance sheet, and
statement of cash flows for the Year 1 accounting period.
c. What is the balance in the Supplies account as
of January 1, Year 2?
d. What is the balance in the Supplies Expense
account as of January 1, Year 2?
1.
Accounting equation
Assets | Liabilities + Stockholders equity | |||
Cash | Supplies | Accounts payable | Retained earnings | |
Provided service | 35,000 | 35,000 | ||
Purchased supplies | 6,000 | 6,000 | ||
Used supplies | - 4,200 | - 4,200 | ||
Balance | 35,000 | 1,800 | 6,000 | 30,800 |
2.
Income statement
Service revenue | 35,000 |
Supply expense | - 4,200 |
Net income | $30,800 |
3.
Balance sheet
Assets | |
Cash | 35,000 |
Supplies | 1,800 |
Total assets | 36,800 |
Liabilities | |
Accounts payable | 6,000 |
Stockholders' equity | |
Retained earnings | 30,800 |
Total liabilities and stockholders' equity | 36,800 |
4.
Statement of cash flows
I. Cash flows from operating activities | |
Service revenue | 35,000 |
Supplies | - 6,000 |
Accounts payable | 6,000 |
Net cash flows from operating activities | 35,000 |
II. Cash flows from investing activities | 0 |
III. Cash flows from financing activities | 0 |
Net change in cash (I + II + III) | 35,000 |
Beginning cash balance | 0 |
Ending cash balance | 35,000 |
4.
Supplies = $1,800
Supplies expense = $4,200
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