Question

Alcorn Service Company was formed on January 1, 2018.

Events Affecting the 2018 Accounting Period

1. Acquired $69,000 cash from the issue of common stock.

2. Purchased $3,000 of supplies on account.

3. Purchased land that cost $36,000 cash.

4. Paid $3,000 cash to settle accounts payable created in Event 2.

5. Recognized revenue on account of $60,000.

6. Paid $30,000 cash for other operating expenses.

7. Collected $47,000 cash from accounts receivable.

Information for 2018 Adjusting Entries

8. Recognized accrued salaries of $4,100 on December 31, 2018.

9. Had $1,100 of supplies on hand at the end of the accounting period.

  

Events Affecting the 2019 Accounting Period

1. Acquired $29,000 cash from the issue of common stock.

2. Paid $4,100 cash to settle the salaries payable obligation.

3. Paid $6,300 cash in advance to lease office space.

4. Sold the land that cost $36,000 for $36,000 cash.

5. Received $7,500 cash in advance for services to be performed in the future.

6. Purchased $1,900 of supplies on account during the year.

7. Provided services on account of $41,000.

8. Collected $42,000 cash from accounts receivable.

9. Paid a cash dividend of $8,000 to the stockholders.

10. Paid other operating expenses of $28,500.

  

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 $1,200 of supplies remaining on hand at the end of the period.

14. Recognized accrued salaries of $4,800 at the end of the accounting period.

15. Recognized $1,300 of accrued interest revenue.

1. b-1. Prepare an income statement for 2018 and 2019.

2. b-2. Prepare the statement of changes in stockholders’ equity for 2018 and 2019.

3. b-3. Prepare the balance sheet for 2018 and 2019.

4. b-4. Prepare the statement of cash flows for 2018 and 2019, using the vertical statements model.

	ALCORN SERVICE COMPANY Income Statements For the Years Ended December 31, 2018 and 2019 2018 2019 Service revenue $60,000 $42,875 Interest revenue 1,300 Total revenue 60,000 44,175 Expenses Operating expenses (30,000) (28,500) Supplies expense (1,900) (1,800) Salaries expense (4,100) (4,800) Rent expense (5,250) Total expenses (36,000) (40,350) Net income $24,000 $3,825

ALCORN SERVICE COMPANY Statement of Changes in Stockholders’ Equity For the Years Ended December 31, 2018 and 2019 2018 2019 Beginning common stock $0 $69,000 Plus: Stock issued 69,000 29,000 Ending common stock 69,000 98,000 Beginning retained earnings $0 24,000 Plus: Net income 24,000 3,825 Less: Dividend 0 (8,000) Ending retained earnings 24,000 19,825 Total stockholders’ equity $93,000 $117,825

ALCORN SERVICE COMPANY Balance Sheets As of December 31, 2018 and 2019 2018 2019 Assets Cash $47,000 $114,600 Accounts receivable 13,000 12,000 Supplies 1,100 1,200 Prepaid rent 0 1,050 Land 36,000 0 Interest receivable 0 1,300 Total assets $97,100 $130,150 Liabilities Accounts payable $0 $1,900 Salaries payable 4,100 4,800 Unearned revenue 0 5,625 Total liabilities 4,100 12,325 Stockholders’ Equity Common stock 69,000 98,000 Retained earnings 24,000 19,825 Total stockholders’ equity 93,000 117,825 Total liabilities and stockholders’ equity $97,100 $130,150

ALCORN SERVICE COMPANY Statements of Cash Flows For the Years Ended December 31, 2018 and 2019 2018 2019 Cash flows from operating activities Cash received from customers $47,000 $42,000 Cash payment for expenses (33,000) (30,400) Net cash flow from operating activities 14,000 11,600 Cash flows from investing acivities Cash payment for land (36,000) 0 Cash proceeds from sale of land 0 36,000 Net cash flow from investing activities (36,000) 36,000 Cash flows from financing activities Cash receipt from stock issue 69,000 29,000 Cash payment for dividends Net cash flow from financing activities 69,000 29,000 Net change in cash 47,000 76,600 Plus: Beginning cash balance 0 47,000 Ending cash balance $47,000 $123,600

Answer 1

CORN SERVICE COMPANY
Income Statements
For the Years Ended December 31, 2018 and 2019
	2018	2019
Service revenue	60000	42875
Interest revenue		1,300
Total revenue	60,000	44,175
Expenses
Operating expenses	-30,000	-28,500
Supplies expense	-1,900	-1,800
Salaries expense	-4,100	-4,800
Rent expense		-5,250
Total expenses	-36,000	-40,350
Net income	24,000	3,825

ALCORN SERVICE COMPANY
Statement of Changes in Stockholders’ Equity
For the Years Ended December 31, 2018 and 2019
	2018	2019
Beginning common stock	0	69000
Plus: Stock issued	69000	29000
Ending common stock	69000	98000
Beginning retained earnings	0	24000
Plus: Net income	24000	3825
Less: Dividend	0	-8000
Ending retained earnings	24000	19825
Total stockholders’ equity	93000	117825

ALCORN SERVICE COMPANY
Balance Sheets
As of December 31, 2018 and 2019
	2018	2019
Assets
Cash	47000	114600
Accounts receivable	13,000	12,000
Supplies	1,100	1,200
Prepaid rent	0	1,050
Land	36,000	0
Interest receivable	0	1,300
Total assets	97100	130150
Liabilities
Accounts payable	0	1900
Salaries payable	4,100	4,800
Unearned revenue	0	5,625
Total liabilities	4,100	12,325
Stockholders’ Equity
Common stock	69,000	98,000
Retained earnings	24,000	19,825
Total stockholders’ equity	93,000	1,17,825
Total liabilities and stockholders’ equity	97,100	1,30,150

LCORN SERVICE COMPANY
Statements of Cash Flows
For the Years Ended December 31, 2018 and 2019
	2018	2019
Cash flows from operating activities
Cash received from customers	47000	49500
Cash payment for expenses	-33,000	-38,900
Net cash flow from operating activities	14,000	10,600
Cash flows from investing activities
Cash payment for land	-36,000	0
Cash proceeds from sale of land	0	36,000
Net cash flow from investing activities	-36,000	36,000
Cash flows from financing activities
Cash receipt from stock issue	69,000	29,000
Cash payment for dividends		-8000
Net cash flow from financing activities	69,000	21,000
Net change in cash	47,000	67,600
Plus: Beginning cash balance	0	47,000
Ending cash balance	47000	114600

Salaries Payable	4100
Lease Rent	6300
Operating expenses	28500
Total Paid	38900

Accounts Receivable	42000
Revenue receipt	7500
Total Receipt	49500

Hope you understood. I corrected your cash flow only, other parts are correct.

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