Cherokee Company began operations when it issued common stock for $80,000 cash. It paid $60,000 cash in

Question:

Cherokee Company began operations when it issued common stock for $80,000 cash. It paid $60,000 cash in advance for a one-year contract to lease delivery equipment for the business. It signed the lease agreement on March 1, Year 1, which was effective immediately. Cherokee received $98,000 of cash revenue in Year 1.

Required
a. Record the March 1 cash payment in general journal format.
b. Record in general journal format the adjustment required as of December 31, Year 1.
c. Show all events in a horizontal statements model like the following one:

Balance Sheet Statement Income Statement Llab. + Stk. Equlty Assets of Cash Flows Rev. - Exp. = Net Inc. Cash Prep. Rent

d. What amount of net income will Cherokee Company report on the Year 1 income statement? What is the amount of net cash flow from operating activities for Year 1?
e. Determine the amount of prepaid rent Cherokee Company would report on the December 31, Year 1, balance sheet.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...

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