Alcorn Service Company was formed on January 1, 2018 Events Affecting the 2018 Accounting Period Acquired $69,000 cash from the issue of common stock Purchased $3,000 of supplies on account Purchased land that cost $36,000 cash Paid $3,000 cash to settle accounts payable created in Event 2 Recognized revenue on account of $60,000 Paid $30,000 cash for other operating expenses Collected $47,000 cash from accounts receivable Information for 2018 Adjusting Entries Recognized accrued salaries of $4,100 on December 31, 2018 Had $1,100 of supplies on hand at the end of the accounting period Events Affecting the 2019 Accounting Period Acquired $29,000 cash from the issue of common stock Paid $4,100 cash to settle the salaries payable obligation Paid $6,300 cash in advance to lease office space Sold the land that cost $36,000 for $36,000 cash Received $7,500 cash in advance for services to be performed in the future Purchased $1,900 of supplies on account during the year Provided services on account of $41,000 Collected $42,000 cash from accounts receivable Paid a cash dividend of $8,000 to the stockholders Paid other operating expenses of $28,500 Information for 2019 Adjusting Entries The advance payment for rental of the office space (see Event 3) was made on March 1 for a one year term 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 Had $1,200 of supplies remaining on hand at the end of the period Recognized accrued salaries of $4,800 at the end of the accounting period Recognized $1,300 of accrued interest revenue b 1 Prepare an income statement for 2018 and 2019 b 2 Prepare the statement of changes in stockholders equity for 2018 and 2019 b 3 Prepare the balance sheet for 2018 and 2019 b 4 Prepare the statement of cash flows for 2018 and 2019, using the vertical statements model ALCORN SERVICE COMPANY Income Statements For the Years Ended December 31, 2018 and 2019 2018 2019 Service revenue $60,000 $42,875 Interest revenue 1,300 Total revenue 60,000 44,175 Expenses Operating expenses (30,000) (28,500) Supplies expense (1,900) (1,800) Salaries expense (4,100) (4,800) Rent expense (5,250) Total expenses (36,000) (40,350) Net income $24,000 $3,825 ALCORN SERVICE COMPANY Statement of Changes in Stockholders Equity For the Years Ended December 31, 2018 and 2019 2018 2019 Beginning common stock $0 $69,000 Plus Stock issued 69,000 29,000 Ending common stock 69,000 98,000 Beginning retained earnings $0 24,000 Plus Net income 24,000 3,825 Less Dividend 0 (8,000) Ending retained earnings 24,000 19,825 Total stockholders equity $93,000 $117,825 ALCORN SERVICE COMPANY Balance Sheets As of December 31, 2018 and 2019 2018 2019 Assets Cash $47,000 $114,600 Accounts receivable 13,000 12,000 Supplies 1,100 1,200 Prepaid rent 0 1,050 Land 36,000 0 Interest receivable 0 1,300 Total assets $97,100 $130,150 Liabilities Accounts payable $0 $1,900 Salaries payable 4,100 4,800 Unearned revenue 0 5,625 Total liabilities 4,100 12,325 Stockholders Equity Common stock 69,000 98,000 Retained earnings 24,000 19,825 Total stockholders equity 93,000 117,825 Total liabilities and stockholders equity $97,100 $130,150 ALCORN SERVICE COMPANY Statements of Cash Flows For the Years Ended December 31, 2018 and 2019 2018 2019 Cash flows from operating activities Cash received from customers $47,000 $42,000 Cash payment for expenses (33,000) (30,400) Net cash flow from operating activities 14,000 11,600 Cash flows from investing acivities Cash payment for land (36,000) 0 Cash proceeds from sale of land 0 36,000 Net cash flow from investing activities (36,000) 36,000 Cash flows from financing activities Cash receipt from stock issue 69,000 29,000 Cash payment for dividends Net cash flow from financing activities 69,000 29,000 Net change in cash 47,000 76,600 Plus Beginning cash balance 0 47,000 Ending cash balance $47,000 $123,600

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Alcorn Service Company was formed on January 1, 2018. Events Affecting the 2018 Accounting Period Acquired $69,000 cash from the issue of common stock. Purchased

Alcorn Service Company was formed on January 1, 2018.

Events Affecting the 2018 Accounting Period

Acquired $69,000 cash from the issue of common stock.
Purchased $3,000 of supplies on account.
Purchased land that cost $36,000 cash.
Paid $3,000 cash to settle accounts payable created in Event 2.
Recognized revenue on account of $60,000.
Paid $30,000 cash for other operating expenses.
Collected $47,000 cash from accounts receivable.

Information for 2018 Adjusting Entries

Recognized accrued salaries of $4,100 on December 31, 2018.
Had $1,100 of supplies on hand at the end of the accounting period.

Events Affecting the 2019 Accounting Period

Acquired $29,000 cash from the issue of common stock.
Paid $4,100 cash to settle the salaries payable obligation.
Paid $6,300 cash in advance to lease office space.
Sold the land that cost $36,000 for $36,000 cash.
Received $7,500 cash in advance for services to be performed in the future.
Purchased $1,900 of supplies on account during the year.
Provided services on account of $41,000.
Collected $42,000 cash from accounts receivable.
Paid a cash dividend of $8,000 to the stockholders.
Paid other operating expenses of $28,500.

Information for 2019 Adjusting Entries

The advance payment for rental of the office space (see Event 3) was made on March 1 for a one-year term.
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.
Had $1,200 of supplies remaining on hand at the end of the period.
Recognized accrued salaries of $4,800 at the end of the accounting period.
Recognized $1,300 of accrued interest revenue.

b-1. Prepare an income statement for 2018 and 2019.
b-2. Prepare the statement of changes in stockholders equity for 2018 and 2019.
b-3. Prepare the balance sheet for 2018 and 2019.
b-4. Prepare the statement of cash flows for 2018 and 2019, using the vertical statements model.

ALCORN SERVICE COMPANY
Income Statements
For the Years Ended December 31, 2018 and 2019
	2018	2019
Service revenue	$60,000	$42,875
Interest revenue		1,300

Total revenue	60,000	44,175
Expenses
Operating expenses	(30,000)	(28,500)
Supplies expense	(1,900)	(1,800)
Salaries expense	(4,100)	(4,800)
Rent expense		(5,250)

Total expenses	(36,000)	(40,350)
Net income	$24,000	$3,825

ALCORN SERVICE COMPANY
Statement of Changes in Stockholders Equity
For the Years Ended December 31, 2018 and 2019
	2018	2019
Beginning common stock	$0	$69,000
Plus: Stock issued	69,000	29,000
Ending common stock	69,000	98,000
Beginning retained earnings	$0	24,000
Plus: Net income	24,000	3,825
Less: Dividend	0	(8,000)
Ending retained earnings	24,000	19,825
Total stockholders equity	$93,000	$117,825

ALCORN SERVICE COMPANY
Balance Sheets
As of December 31, 2018 and 2019
	2018	2019
Assets
Cash	$47,000	$114,600
Accounts receivable	13,000	12,000
Supplies	1,100	1,200
Prepaid rent	0	1,050
Land	36,000	0
Interest receivable	0	1,300

Total assets	$97,100	$130,150
Liabilities
Accounts payable	$0	$1,900
Salaries payable	4,100	4,800
Unearned revenue	0	5,625

Total liabilities	4,100	12,325
Stockholders Equity
Common stock	69,000	98,000
Retained earnings	24,000	19,825

Total stockholders equity	93,000	117,825
Total liabilities and stockholders equity	$97,100	$130,150

ALCORN SERVICE COMPANY
Statements of Cash Flows
For the Years Ended December 31, 2018 and 2019
	2018	2019
Cash flows from operating activities
Cash received from customers	$47,000	$42,000
Cash payment for expenses	(33,000)	(30,400)

Net cash flow from operating activities	14,000	11,600
Cash flows from investing acivities
Cash payment for land	(36,000)	0
Cash proceeds from sale of land	0	36,000

Net cash flow from investing activities	(36,000)	36,000
Cash flows from financing activities
Cash receipt from stock issue	69,000	29,000
Cash payment for dividends

Net cash flow from financing activities	69,000	29,000
Net change in cash	47,000	76,600
Plus: Beginning cash balance	0	47,000
Ending cash balance	$47,000	$123,600