1-8, 1-9, 1-10 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 $20,000 by issuing common stock. 2. Received $35,000 for providing services to customers. 3. Borrowed $25,000 cash from creditors. 4. Paid expenses amounting to $22,000. 5. Purchased land for $30,000 cash. Transactions for Year 2 Beginning account balances for Year 2 are: Cash Land Notes payable Common stock Retained earnings $ 28,000 30,000 25,000 20,000 13,000 1. Acquired an additional $24,000 from the issue of common stock. 2. Received $95,000 for providing services in Year 2. 3. Paid $15,000 to reduce notes payable. 4. Paid expenses amounting to $71,500. 5. Paid a $3,000 dividend to the stockholders. 6. Determined that the market value of the land is $47,000. MARK'S CONSULTING Statement of Cash Flows For the Year Ended December 31, Year 1 & Year 2 Year 1 Year 2 Cash flows from operating activities: Cash receipts from customers Cash payments for expenses $ 35,000 22,000 Net cash flow from operating activities Cash flows from investing activities: $ 57,000 $ 0 Net cash flow from investing activities Cash flows from financing activities: 0 0 Net cash flow from financing activities 0 0 Assets Cash Land Cash Total assets Total liabilities Stockholders' Equity Common stock Notes payable Total stockholders' equity MARK'S CONSULTING Balance Sheet December 31, Year 1 & Year 2 Total liabilities and stockholders' equity Year 1 Year 2 $ 28,000 $ 57,500 30,000 30,000 SA $ 58,000 $ 87,500 20,000 10,000 20,000 10,000 SA $ 20,000 $ 10,000 MARK'S CONSULTING Statement of Changes in Stockholders' Equity For the Period Ended December 31, Year 1 & Year 2 Year 1 Year 2 Beginning common stock $ 20,000 Plus: Common stock issued 20,000 24,000 Ending common stock $ 20,000 $ 44,000 Beginning retained earnings $ 13,000 Plus: Net income 13,000 23,500 Less: Dividends (3,000) Ending retained earnings $ 13,000 $ 33,500 Total stockholders' equity $ 33,000 $ 77,500 MARK'S CONSULTING Income Statement For the Period Ended December 31, Year 1 & Year 2 Accounts receivable Accounts payable Net income Year 1 Year 2 $ 35,000 EA $ 95,000 22,000 71,500 SA $ 13,000 $ 23,500