1-33A (Algo) Preparing financial statements for two complete accounting cycles LO 1-3, 1-4, 1-5, 1-7, 1-8, 1-9 Mark's Consulting experienced the following transactions for Year 1, its first year of operations, and Year 2. Assume that all transactions involve the receipt or payment of cash. Transactions for Year 1 1. Acquired $75,000 by issuing common stock. 2. Received $125,000 cash for providing services to customers. 3. Borrowed $20,000 cash from creditors. 4. Paid expenses amounting to $55,000. 5. Purchased land for $30,000 cash. Transactions for Year 2 Beginning account balances for Year 2 are: Cash $135,000 Land 30,000 Notes payable 20,000 Common stock 75,000 Retained earnings 70,000 1. Acquired an additional $25,000 from the issue of common stock. 2. Received $135,000 for providing services. 3. Paid $15,000 to creditors to reduce loan. 4. Paid expenses amounting to $70,000. 5. Paid a $12,500 dividend to the stockholders. 6. Determined that the market value of the land is $40,000. Required a. Record the effects of each accounting event under the appropriate headings for each year. Record the amounts of revenue, expense, and dividends in the Retained Earnings column. Provide appropriate titles for these accounts in the last column of the table. b-1. Prepare an income statement for each year accounting period. b-2. Prepare a statement of changes in stockholders' equity for each year accounting period. b-3. Prepare a year-end balance sheet for each year accounting period. b-4. Prepare a statement of cash flows for each year accounting period. c. Determine the amount of cash that is in the retained earnings account at the end of Year 1 and Year 2. e. Determine the balance in the Retained Earnings account immediately after Event 2 in Year 1 is recorded and after Event 2 in Year 2 is recorded. Complete this question by entering your answers in the tabs below. Dan A Den 1 Ben B Den 09 Dan BA Dan Own E Req A Req B1 Req B2 Req B3 Req B4 Req C Req E Record the effects of each accounting event under the appropriate headings for each year. Record the amounts of revenue, expense, dividends in the Retained Earnings column. Provide appropriate titles for these accounts in the last column of the table. (Enter any d account balances with a minus sign. If there is no effect on the Account Titles for Retained Earnings, leave the cell blank. Not all cell input.) MARK'S CONSULTING SERVICES Accounting Equation for Year 1 Liabilities 4 Assets Event Cash Land Notes Payable 1. 4 2. 3. + 4. 5. 0- 0+ Totals Stockholders' Equity Account Titles for Common Stock Retained Earnings Retained Earnings + 0+ MARK'S CONSULTING SERVICES Accounting Equation for Year 2 Event Beg. bal. 1. 2. Cash 3. 4. 5. MARK'S CONSULTING SERVICES Accounting Equation for Year 2 Stockholders' Equity Assets Liabilities + Land Notes Payable Common Stock = 6. = Totals 0 + 0 = 0+ + 0+ Reg Retained Earnings Account Titles for Retained Earnings 0 Req B1 > Req A Req B1 Req B2 Req B3 Req B4 Req C Req E Prepare an income statement for each year accounting period. MARK'S CONSULTING SERVICES Income Statement For the Year Ended December 31, Year 1 MARK'S CONSULTING SERVICES Income Statement For the Year Ended December 31, Year 2 Req A Req B1 Req B2 Req 83 Req B4 Req C Req E Prepare a statement of changes in stockholders' equity for each year accounting period. (Amounts to be deducted should be indicated with minus sign.) MARK'S CONSULTING SERVICES Statement of Changes in Stockholders' Equity For the Year Ended December 31, Year 1 Beginning common stock Ending common stock Beginning retained eamings Ending retained eamings Total stockholders' equity $ 0 0 $ 0 MARK'S CONSULTING SERVICES Statement of Changes in Stockholders' Equity For the Year Ended December 31, Year 2 Beginning common stock Total stockholders' equity MARK'S CONSULTING SERVICES Statement of Changes in Stockholders' Equity For the Year Ended December 31, Year 2 Beginning common stock Ending common stock Beginning retained earnings $ 0 Ending retained earnings 0 Total stockholders' equity $ 0 Req A Req B1 Req B2 Req B3 Req B4 Req C Req E Prepare a year-end balance sheet for each year accounting period. MARK'S CONSULTING SERVICES Balance Sheet As of December 31, Year 1 Assets Total assets Liabilities Total liabilities Stockholders' Equity Total stockholders' anuity $ 0 $ 0 n Total liabilities and stockholders' equity MARK'S CONSULTING SERVICES Balance Sheet As of December 31, Year 2 Assets Total assets Liabilities Total liabilities Stockholders' Equity Total stockholders' equity Total liabilities and stockholders' equity $ $ $ 0 00 Req A Req B1 Req B2 Req B3 Req B4 Req C Req E Prepare a statement of cash flows for each year accounting period. (Cash outflows should be indicated with a minus sign.) MARK'S CONSULTING SERVICES Statement of Cash Flows For the Year Ended December 31, Year 1 Cash flows from operating activities Net cash flow from operating activities Cash flows from investing activities Net cash flow from investing activities Cash flows from financing activities $ 0 0 Net cash flow from financing activities < Prev 2 of 3 Next > Ending cash balance MARK'S CONSULTING SERVICES Statement of Cash Flows For the Year Ended December 31, Year 2 Cash flows from operating activities $ 0 Net cash flow from operating activities $ 0 Cash flows from investing activities Cash flows from financing activities Net cash flow from financing activities Ending cash balance 0 $ 0 Complete this question by entering your answers in the tabs below. Req A Req B1 Req B2 Req B3 Req B4 Req C Req E Determine the amount of cash that is in the retained earnings account at the end of Year 1 and Year 2. Retained earnings Year 1 Year 2 plote lins question by entering your answers in the tabs below. Req A Req B1 Req 82 Req 83 Req B4 Req C Req E Determine the balance in the Retained Earnings account immediately after Event 2 in Year 1 is recorded and after Event 2 in Year 2 is recorded. Year 1 Year 2 Retained earnings