Alcorn Service Company was formed on January 1, Year 1. Events Affecting the Year 1 Accounting Period 1. Acquired $20,000 cash from the issue of common stock. 2. Purchased $800 of supplies on account. 3. Purchased land that cost $14,000 cash. 4. Paid $800 cash to settle accounts payable created in Event 2. 5. Recognized revenue on account of $10,500. 6. Paid $3,800 cash for other operating expenses. 7. Collected $7,000 cash from accounts receivable. Information for Year 1 Adjusting Entries 8. Recognized accrued salaries of $3,600 on December 31, Year 1. 9. Had $100 of supplies on hand at the end of the accounting period. Events Affecting the Year 2 Accounting Period 1. Acquired $15,000 cash from the issue of common stock. 2. Paid $3,600 cash to settle the salaries payable obligation. 3. Paid $9,000 cash in advance to lease office space. 4. Sold the land that cost $14,000 for $14,000 cash. 5. Received $6,000 cash in advance for services to be performed in the future. 6. Purchased $2,400 of supplies on account during the year. 7. Provided services on account of $24,500. 8. Collected $12,600 cash from accounts receivable. 9. Paid a cash dividend of $2,000 to the stockholders. 10. Paid other operating expenses of $2,850. Information for Year 2 Adjusting Entries 11. The advance payment for rental of the office space (see Event 3) was made on March 1 for a one-year term. 12. 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. 13. Had $300 of supplies remaining on hand at the end of the period. 14. Recognized accrued salaries of $4,800 at the end of the accounting period. 15. Recognized $500 of accrued interest revenue. Req B1 Req B2 Req B3 Req B4 Prepare the balance sheet for Year 1 and Year 2. ALCORN SERVICE COMPANY Balance Sheets As of December 31, Year 1 and Year 2 Year 1 Year 2 Assets Cash Accounts receivable Supplies Prepaid rent Land 800 X Total assets $ HA 800 $ 0 Liabilities Salaries payable Accounts payable Unearned revenue 0 0 0 Total liabilities Stockholders' Equity Common stock Retained earnings 0 0 Total stockholders' equity Total liabilities and stockholders' equity $ 0 $ 0 Req B1 Req B2 Req B3 Req B4 Prepare the statement of cash flows for Year 1 and Year 2, using the vertica indicated with a minus sign.) ALCORN SERVICE COMPANY Statements of Cash Flows For the Years Ended December 31, Year 1 and Year 2 Year 1 Year 2 Cash flows from operating activities Cash received from customers Cash payment for expenses 0 0 Net cash flow from operating activities Cash flows from investing acivities Cash payment for land Cash proceeds from sale of land 0 0 Net cash flow from investing activities Cash flows from financing activities Cash receipt from stock issue Cash payment for dividends 0 0 0 0 Net cash flow from financing activities Net change in cash Plus: Beginning cash balance Ending cash balance $ 0 $ 0
