Question

The following transactions pertain to Smith Training Company for Year 1:

Jan.	30		Established the business when it acquired $48,000 cash from the issue of common stock.
Feb.	1		Paid rent for office space for two years, $17,400 cash.
Apr.	10		Purchased $880 of supplies on account.
July	1		Received $28,000 cash in advance for services to be provided over the next year.
	20		Paid $660 of the accounts payable from April 10.
Aug.	15		Billed a customer $9,300 for services provided during August.
Sept.	15		Completed a job and received $2,600 cash for services rendered.
Oct.	1		Paid employee salaries of $31,000 cash.
	15		Received $8,700 cash from accounts receivable.
Nov.	16		Billed customers $31,500 for services rendered on account.
Dec.	1		Paid a dividend of $1,100 cash to the stockholders.
	31		Adjusted records to recognize the services provided on the contract of July 1.
	31		Recorded $2,500 of accrued salaries as of December 31.
	31		Recorded the rent expense for the year. (See February 1.)
	31		Physically counted supplies; $80 was on hand at the end of the period.

d. Prepare the income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for Year 1. (Round your final answers to the nearest whole dollar amount. Statement of Cash Flows only, items to be deducted must be indicated with a negative amount.)

	SMITH TRAINING COMPANY Financial Statements For the Year Ended December 31, Year 1 Income Statement    Expenses Total expenses Statement of Changes in Stockholders’ Equity Total Stockholders’ Equity

	SMITH TRAINING COMPANY Balance Sheet As of December 31, Year 1 Assets       Total assets Liabilities Total liabilities Stockholders’ Equity Total stockholders' equity Total liabilities and stockholders' equity

Answer 1

Smith Training Company
Income Statement
For Year 1 (amounts in $)
service revenue	57400
total revenue		57400
less: expenses
salaries expenses	31000
accrued salaries	2500
rent expense	7975
supplies expenses	800
total exepsens		42275
net income		15125

supplies expenses is calcuated as below

opening supply	0
additions	880
less closing supply	80
balace is supply expenses	800

rent expenses

for 24 months = $17400

for 11 months = $7975

Smith Training Company
statement of changes in stockholders equity
As of Year 1 (amounts in $)
common stock		48000
retained earnings:
beginning	0
add:net income	15125
less:dividend	-1100
ending retained earnings		14025
total stockholders equity		62025

Smith Training Company
Balance Sheet
As of Year 1 (amounts in $)
Assets
cash	37140
accounts receivable	32100
supplies	80
prepaid rent	9425
total assets		78745
Liabilities and stockholders equity
Liabilities
accounts payable	220
salaries payable	2500
unearned revenue	14000
total liabilities		16720
stockholders equity
common stock	48000
ending retained earnings	14025
total stockholders equity		62025
total liabilitites and stockholders equity		78745

Smith Training Company
statement of cash flows
As of Year 1 (amounts in $)
cash flow from operating activities
cash received from customers	39300
cash paid for expenses	-48400
cash paid to customer	-660
net cash flow from operating activities		-9760
cash flow from investing activities	0	0
cash flow from financing activities
issue of stock	48000
dividend paid	-1100
net cash flow from financing activities		46900
net change in cash flow		37140
beginning cash		0
ending cash		37140

I have used the accounting equation to record the transactions-

events	cash	accounts receivable	supplies	prepaid rent	accounts payable	salaries payable	unearned revenue	common stock	revenue
Jan-30	48000							48000
Feb-01	-17400			17400
Apr-10			880		880
Jul-01	28000						28000
Jul-20	-660				-660
Aug-15		9300							9300
Sep-15	2600								2600
Oct-01	-31000								-31000
Oct-15	8700	-8700
Nov-16		31500							31500
Dec-01	-1100								-1100
Dec-31							-14000		14000
Dec-31						2500			-2500
Dec-31				-7975					-7975
Dec-31			-800						-800
total	37140	32100	80	9425	220	2500	14000	48000	14025