Question

Required information [The following information applies to the questions displayed below.) The following transactions pertain to Smith Training Company for Year 1: Jan. 30 Established the business when it acquired $52,000 cash from the issue of common Ecock. Feb. 1 Paid rent for office space for two years, $16,400 cash. Apr. 10 Purchased $790 of supplies on account. July 1 Received $29,500 cash in advance for services to be provided over the next year. 20 Paid $593 of the accounts payable from April 10. Aug. 15 Billed a customer $10,200 for services provided during August. Sept. 15 Completed a job and received $2,800 cash for services rendered. Oct. 1 Paid employee salaries of $31,000 cash. 15 Received $8,400 cash from accounts receivable. Nov. 16 Billed customers $39,500 for services rendered on account. Dec. 1 Paid a dividend of $1,300 cash to the stockholders. 31 Adjusted records to recognize the services provided on the contract of July 1. 31 Recorded $2,350 of accrued salaries as of December 31. 31 Recorded the rent expense for the year. (See February 1.) 31 Physically counted supplies; $140 was on hand at the end of the period. d. Prepare an 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

Answer 1

Income Statement:

SMITH TRAINING COMPANY
Income Statement
For the year ended Dec 31, Year 1
Revenues:
Service revenue		$67,250
Expenses:
Salaries expense	$33,350
Rent expense	$7,517
Supplies expense	$650
Total expenses		$41,517
Net income		$25,733

Statement of changes in stockholders' equity:

SMITH TRAINING COMPANY
Statement of changes in stockholders' equity
For the year ended Dec 31, Year 1
	Common stock	Retained earnings	Total
Beg. Bal.	$0	$0	$0
Investment	$52,000		$52,000
Net income		$25,733	$25,733
Dividends		($1,300)	($1,300)
End. Bal.	$52,000	$24,433	$76,433

Balance Sheet:

SMITH TRAINING COMPANY
Balance Sheet
At December 31, Year 1
Assets		Liabilities and stockholders' equity
Cash	$43,407	Accounts payable	$197
Accounts receivable	$41,300	Salaries payable	$2,350
Prepaid rent	$8,883	Unearned revenue	$14,750
Supplies	$140	Total liabilities	$17,297
		Stockholders' equity:
		Common stock	$52,000
		Retained earnings	$24,433
		Total stockholders' equity	$76,433
Total assets	$93,730	Total liabilities and stockholders' equity	$93,730

Cash flow statement:

SMITH TRAINING COMPANY
Cash flow statement
For the year ended December 31, Year 1
Cash flows from operating activities:
Cash received from customers (2800+8400)	$11,200
Cash received in advance from customers	$29,500
Cash paid for rent	($16,400)
Cash paid to creditors	($593)
Cash paid for salaries	($31,000)
Net cash provided(used) by operating activities		($7,293)
Cash flows from investing activities		$0
Cash flows from financing activities:
Issuance of common stock	$52,000
Cash paid for dividends	($1,300)
Net cash provided(used) by financing activities		$50,700
Net increase (decrease) in cash		$43,407
Cash balance, Beginning		$0
Cash balance, Ending		$43,407

Calculations:

SMITH TRAINING COMPANY
Trial Balance
December 31, Year 1
Account Titles	Debit	Credit
Cash	$43,407
Accounts receivable	$41,300
Prepaid rent	$8,883
Supplies	$140
Accounts payable		$197
Salaries payable		$2,350
Unearned revenue		$14,750
Common stock		$52,000
Dividends	$1,300
Service revenue		$67,250
Salaries expense	$33,350
Rent expense	$7,517
Supplies expense	$650
Total	$136,547	$136,547

Income statement, statement of changes in equity, balance sheet prepared based on the adjusted trial balance