Question

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Alcorn Service Company was formed on January 1, 2018. Events Affecting the 2018 Accounting Period 1. Acquired $77,000 cash from the issue of common stock. 2. Purchased $4,600 of supplies on account. 3. Purchased land that cost $52,000 cash. 4. Paid $4,600 cash to settle accounts payable created in Event 2. 5. Recognized revenue on account of $76,000. 6. Paid $38,000 cash for other operating expenses. 7. Collected $55,000 cash from accounts receivable. Information for 2018 Adjusting Entries 8. Recognized accrued salaries of $4,900 on December 31, 2018 9. Had $1,900 of supplies on hand at the end of the accounting period. Events Affecting the 2019 Accounting Period 1. Acquired $37.000 cash from the issue of common stock. 2. Paid $4,900 cash to settle the salaries payable obligation 3. Paid $8,700 cash in advance to lease office space. 4. Sold the land that cost $52,000 for $52,000 cash. 5. Received $9,900 cash in advance for services to be performed in the future. 6. Purchased $2,700 of supplies on account during the year 7. Provided services on account of $49,000. 8. Collected $50,000 cash from accounts receivable. 9. Pald a cash dividend of $9,000 to the stockholders. 10. Pald other operating expenses of $36,500. 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

Answer 1

Income statement
	2018	2019
Service revenue	$                     76,000	$               51,475	(35000+5700*3/12)
Interest revenue		$                 2,100
Total revenue	$                     76,000	$               53,575
Expenses
Operating expenses	$                   (38,000)	$            (36,500)
Supplies expense	$                     (1,900)	$               (3,400)
Salaries expense	$                     (4,900)	$               (5,600)
Rent expense		$               (7,250)	(8700*10/12)
Total expenses	$                   (44,800)	$            (52,750)
Net Income/(loss)	$                     31,200	$                     825
Statement of changes in stockholder's equity
	2018	2019
Beginning common stock		$               77,000
Plus:stock issued	$                     77,000	$               37,000
Ending common stock	$                     77,000	$            114,000
Beginning retained earnings	$                               -	$               31,200
Plus:Net income/(lossS)	$                     31,200	$                     825
Less:dividends		$               (9,000)
ending retained earnings	$                     31,200	$               23,025
Total stockholder's equity	$                   108,200	$            137,025

Balance sheet
	2018	2019
Assets:
cash	$             37,400	$            127,200
Accounts receivable	$             21,000	$              20,000
Interest receivable		$                 2,100
Supplies	$               2,700	$                 2,000
Prepaid rent		$                 1,450
Land	$             52,000	$                        -
Total assets	$          113,100	$            152,750
Liabilities
Accounts Payable	$                      -	$                 2,700
Salaries payable	$               4,900	$                 5,600
Unearned revenue		$                 7,425
Total liabilties	$               4,900	$              15,725
Stockholder's equity
Common stock	$             77,000	$            114,000
retained earnings	$             31,200	$              23,025
Total Stockholder's equity	$          108,200	$            137,025
Total liabilties & equity	$          113,100	$            152,750

statement of cash flows
	2018	2019
Cash flow from operating activites:
Cash receipts from customers	$          55,000	59900
Cash payments for expense	-42600	-50100
Net cash flow from operating activities	12400	9800
Cash flow from investing activites:
Cash payment for land	-52000
Cash proceeds from sale of land		52000
Net cash flow from investing activities	-52000	52000
Cash flow from financing activites:
Cash receipts from stock issue	$          77,000	$                         37,000
Cash payment for dividends	0	$                         (9,000)
Net cash flow from financing activities	$          77,000	$                         28,000
Net change in cash	$          37,400	$                         89,800
Add:opening cash balance		$                         37,400
closing cash balance	$          37,400	$                      127,200
Notes
Cash Sales
2018	55000
2019	9900+50000
Cash expenses
2018:4600+38000
2019:4900+8700+36500