Question

Yard Designs (YD) experienced the following events in Year 1, its first year of operation: 1. On October 1, Year 1, YD collected $54,000 for consulting services it agreed to provide during the coming year. 2. Adjusted the accounts to reflect the amount of consulting service revenue recognized in Year 1. Required Based on this information alone: a. Record the events under an accounting equation (Enter any decreases to account balances with a minus sign.) YARD DESIGNS Accounting Equations for the Year 1 Assets Event Liabilities Unearned Revenue Stockholders Equity Retained Earnings Cash Advance payment Revenue earned

Answer 1

	Assets	Liabilities	Stockholder's Equity
Event	Cash	Unearned Revenue	Retained Earnings
Advance Payment	$        54,000	$         54,000
Revenue Earned		$       (13,500)	$           13,500
	$        54,000	$         40,500	$           13,500

Income Statement
Service Revenue	$        13,500
Net Income	$        13,500

Assets
Cash	$        54,000
Total Assets	$        54,000
Liabilities
Unearned Revenue	$        40,500
Total Liabilities	$        40,500
Stockholder's Equity
Retained Earnings	$        13,500
Total Stockholder's Equity	$        13,500
Total Liabilities & Stockholder's Equity	$       54,000

Cash Flow Statement
Indirect Method
Cash flow from Operating Activities
Cash Collected from Customers	$        54,000
Net Cash from operating activities		$         54,000
Cash flow from Investing Activities		$                  -
Cash flow from Financing Activities		$                  -
Net Increase in cash		$         54,000
Beginning Balance of Cash		$                  -
Ending Balance of Cash		$         54,000

c.
Service revenue to be recognized in Year 2 = $40500

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