Energy Consulting Company was formed on January 1, 2012. Events Affecting the 2012 Accounting Period 1. Acquired

Question:

Energy Consulting Company was formed on January 1, 2012.

Events Affecting the 2012 Accounting Period

1. Acquired cash of $80,000 from the issue of common stock.

2. Purchased $4,200 of supplies on account.

3. Purchased land that cost $30,000 cash.

4. Paid $4,200 cash to settle accounts payable created in Event 2.

5. Recognized revenue on account of $75,000.

6. Paid $46,000 cash for other operating expenses.

7. Collected $68,000 cash from accounts receivable.

Information for 2012 Adjusting Entries

8. Recognized accrued salaries of $5,800 on December 31, 2012.

9. Had $300 of supplies on hand at the end of the accounting period.

Events Affecting the 2013 Accounting Period

1. Acquired an additional $10,000 cash from the issue of common stock.

2. Paid $5,800 cash to settle the salaries payable obligation.

3. Paid $6,000 cash in advance for a lease on office facilities.

4. Sold land that had cost $25,000 for $25,000 cash.

5. Received $8,400 cash in advance for services to be performed in the future.

6. Purchased $1,800 of supplies on account during the year.

7. Provided services on account of $90,000.

8. Collected $92,000 cash from accounts receivable.

9. Paid a cash dividend of $10,000 to the stockholders.

Information for 2013 Adjusting Entries

10. The advance payment for rental of the office facilities (see Event 3) was made on September 1 for a one-year lease term.

11. The cash advance for services to be provided in the future was collected on June 1 (see Event 5). The one-year contract started June 1.

12. Had $350 of supplies on hand at the end of the period.

13. Recognized accrued salaries of $6,500 at the end of the accounting period.

Required

a. Identify each event affecting the 2012 and 2013 accounting periods as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). Record the effects of each event under the appropriate general ledger account headings of the accounting equation.

b. Prepare an income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for 2012 and 2013, using the vertical statements model.

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