Question
Alcorn Service Company was formed on January 1, 2018. Events Affecting the 2018 Accounting Period Acquired $66,000 cash from the issue of common stock. Purchased
Alcorn Service Company was formed on January 1, 2018.
Events Affecting the 2018 Accounting Period
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Acquired $66,000 cash from the issue of common stock.
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Purchased $2,400 of supplies on account.
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Purchased land that cost $30,000 cash.
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Paid $2,400 cash to settle accounts payable created in Event 2.
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Recognized revenue on account of $54,000.
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Paid $27,000 cash for other operating expenses.
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Collected $44,000 cash from accounts receivable.
Information for 2018 Adjusting Entries
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Recognized accrued salaries of $3,800 on December 31, 2018.
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Had $800 of supplies on hand at the end of the accounting period.
Events Affecting the 2019 Accounting Period
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Acquired $26,000 cash from the issue of common stock.
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Paid $3,800 cash to settle the salaries payable obligation.
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Paid $5,400 cash in advance to lease office space.
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Sold the land that cost $30,000 for $30,000 cash.
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Received $6,600 cash in advance for services to be performed in the future.
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Purchased $1,600 of supplies on account during the year.
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Provided services on account of $38,000.
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Collected $39,000 cash from accounts receivable.
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Paid a cash dividend of $5,000 to the stockholders.
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Paid other operating expenses of $25,500.
Information for 2019 Adjusting Entries
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The advance payment for rental of the office space (see Event 3) was made on March 1 for a one-year term.
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The cash advance for services to be provided in the future was collected on October 1 (see Event 5). The one-year contract started on October 1.
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Had $900 of supplies remaining on hand at the end of the period.
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Recognized accrued salaries of $4,500 at the end of the accounting period.
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Recognized $1,000 of accrued interest revenue.
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b-1. Prepare an income statement for 2018 and 2019.
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b-2. Prepare the statement of changes in stockholders equity for 2018 and 2019.
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b-3. Prepare the balance sheet for 2018 and 2019.
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b-4. Prepare the statement of cash flows for 2018 and 2019, using the vertical statements model.
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