Alcorn Service Company was formed on January 1, Year 1 Events Affecting the Year 1 Accounting Period Acquired $78,000 cash from the issue of common stock Purchased $4,800 of supplies on account Purchased land that cost $54,000 cash Paid $4,800 cash to settle accounts payable created in Event 2 Recognized revenue on account of $78,000 Paid $39,000 cash for other operating expenses Collected $56,000 cash from accounts receivable Information for Year 1 Adjusting Entries Recognized accrued salaries of $5,000 on December 31, Year 1 Had $2,000 of supplies on hand at the end of the accounting period Events Affecting the Year 2 Accounting Period Acquired $38,000 cash from the issue of common stock Paid $5,000 cash to settle the salaries payable obligation Paid $9,000 cash in advance to lease office space Sold the land that cost $54,000 for $54,000 cash Received $10,200 cash in advance for services to be performed in the future Purchased $2,800 of supplies on account during the year Provided services on account of $50,000 Collected $51,000 cash from accounts receivable Paid a cash dividend of $4,000 to the stockholders Paid other operating expenses of $37,500 Information for Year 2 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 $2,100 of supplies remaining on hand at the end of the period Recognized accrued salaries of $5,700 at the end of the accounting period Recognized $2,200 of accrued interest revenue Required Identify each event affecting the Year 1 and Year 2 accounting periods as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE) Record the effects of each event under the appropriate general ledger account headings of the accounting equation Part B b 1 Prepare an income statement for Year 1 and Year 2 b 2 Prepare the statement of changes in stockholders equity for Year 1 and Year 2 b 3 Prepare the balance sheet for Year 1 and Year 2 b 4 Prepare the statement of cash flows for Year 1 and Year 2, using the vertical statements model

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Alcorn Service Company was formed on January 1, Year 1. Events Affecting the Year 1 Accounting Period Acquired $78,000 cash from the issue of common

Alcorn Service Company was formed on January 1, Year 1.

Events Affecting the Year 1 Accounting Period

Acquired $78,000 cash from the issue of common stock.
Purchased $4,800 of supplies on account.
Purchased land that cost $54,000 cash.
Paid $4,800 cash to settle accounts payable created in Event 2.
Recognized revenue on account of $78,000.
Paid $39,000 cash for other operating expenses.
Collected $56,000 cash from accounts receivable.

Information for Year 1 Adjusting Entries

Recognized accrued salaries of $5,000 on December 31, Year 1.
Had $2,000 of supplies on hand at the end of the accounting period.

Events Affecting the Year 2 Accounting Period

Acquired $38,000 cash from the issue of common stock.
Paid $5,000 cash to settle the salaries payable obligation.
Paid $9,000 cash in advance to lease office space.
Sold the land that cost $54,000 for $54,000 cash.
Received $10,200 cash in advance for services to be performed in the future.
Purchased $2,800 of supplies on account during the year.
Provided services on account of $50,000.
Collected $51,000 cash from accounts receivable.
Paid a cash dividend of $4,000 to the stockholders.
Paid other operating expenses of $37,500.

Information for Year 2 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 $2,100 of supplies remaining on hand at the end of the period.
Recognized accrued salaries of $5,700 at the end of the accounting period.
Recognized $2,200 of accrued interest revenue.

Required:

Identify each event affecting the Year 1 and Year 2 accounting periods as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). Record the effects of each event under the appropriate general ledger account headings of the accounting equation.

Part B

b-1. Prepare an income statement for Year 1 and Year 2.

b-2. Prepare the statement of changes in stockholders equity for Year 1 and Year 2.

b-3. Prepare the balance sheet for Year 1 and Year 2.

b-4. Prepare the statement of cash flows for Year 1 and Year 2, using the vertical statements model.