Events Affecting the Year 1 Accounting Period

1. Acquired $61,000 cash from the issue of common stock.
2. Purchased $1,400 of supplies on account.
3. Purchased land that cost $20,000 cash.
4. Paid $1,400 cash to settle accounts payable created in Event 2.
5. Recognized revenue on account of $44,000.
6. Paid $22,000 cash for other operating expenses.
7. Collected $39,000 cash from accounts receivable.

Information for Year 1 Adjusting Entries

8. Recognized accrued salaries of $3,300 on December 31, Year 1.
9. Had $300 of supplies on hand at the end of the accounting period.

Events Affecting the Year 2 Accounting Period

1. Acquired $21,000 cash from the issue of common stock.
2. Paid $3,300 cash to settle the salaries payable obligation.
3. Paid $3,900 cash in advance to lease office space.
4. Sold the land that cost $20,000 for $20,000 cash.
5. Received $5,100 cash in advance for services to be performed in the future.
6. Purchased $1,100 of supplies on account during the year.
7. Provided services on account of $33,000.
8. Collected $34,000 cash from accounts receivable.
9. Paid a cash dividend of $6,000 to the stockholders.
10. Paid other operating expenses of $20,500.

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 $400 of supplies remaining on hand at the end of the period.
14. Recognized accrued salaries of $4,000 at the end of the accounting period.

Required a. 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. b. Prepare an income statement, statement of changes in stockholders equity, balance sheet, and statement of cash flows for Year 1 and Year 2.

Flows Required A Required A Required B Inc Required B Required B Required B Bal Year 1 Stmt Year 2 Stmt Stmt of Cash Sheet Stkholders Eq Identify each event affecting the Year 1 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. (Do not round intermediate calculations. Enter any decreases to account balances with a minus sign.) ALCORN SERVICE COMPANY Accounting Equation for Year 1 Assets + Event Type of Event Accounts Receivable Cash Liabilities Salaries Payable Prepaid Rent Supplies Stockholders' Equity Common Retained Stock Earnings Accounts Payable Land Unearned Revenue 1. + 2. + 3 + 4. + 5. + 6. 7 8. +++ 9. + Totals 0 0 0 - 0 0 + 0 0 Required A Year 1 Required A Year 2 > Required B Required A Required B Required A Required B Inc Required B Bal Stmt of Cash Stmt Year 1 Year 2 Stmt Sheet Stkholders Eq Flows Identify each event affecting the 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. (Do not round intermediate calculations. Enter any decreases to account balances with a minus sign.) ALCORN SERVICE COMPANY Accounting Equation for Year 2 Assets Event Type of Event Accounts Receivable Cash Liabilities Salaries Payable Prepaid Rent Supplies Stockholders' Equity Common Retained Stock Earnings Accounts Payable Land Unearned Revenue + Bal. + 1. + 2. + 3 + 4. + 5 + 6. + 7 - + 8 + 9 + 10. + 11. + 12. + 13. + 14. + Totals 0 0 0 0 0 = 0 0 0 0 0 + Required A Required A Required B Inc Year 2 Stmt Year 1 Required B Stmt Stkholders Eq Required B Bal Sheet Required B Stmt of Cash Flows Prepare an income statement for Year 1 and Year 2. (Do not round intermediate calculations.) ALCORN SERVICE COMPANY Income Statements For the Years Ended December 31, Year 1 and Year 2 Year 1 Year 2 Total revenue 0 0 Expenses Total expenses 0 0 $ 0 $ 0 Required A Year 1 Required A Year 2 Required B Inc Stmt Required B Stmt Stkholders Eq Required B Bal Sheet Required B Stmt of Cash Flows Prepare the statement of changes in stockholders' equity for Year 1 and Year 2. ALCORN SERVICE COMPANY Statement of Changes in Stockholders' Equity For the Years Ended December 31, Year 1 and Year 2 Year 1 Year 2 Beginning common stock 0 0 Ending common stock Beginning retained earnings 0 0 Ending retained earnings Total stockholders' equity $ 0 $ 0 Required A Year 1 Required A Required B Inc Year 2 Stmt Required B Stmt Stkholders Eq Required B Bal Sheet Required B Stmt of Cash Flows 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 $ 0 $ 0 Total assets Liabilities 0 0 Total liabilities Stockholders' Equity 0 0 Total stockholders' equity Total liabilities and stockholders' equity $ 0 $ 0 Required A Required A Required B Inc Required B Required B Bal Required B Stmt Year 1 Year 2 Stmt of Cash Stmt Sheet Stkholders Eq Flows Prepare the statement of cash flows for Year 1 and Year 2. (Amounts to be deducted should be indicated wit ALCORN SERVICE COMPANY Statements of Cash Flows For the Years Ended December 31, Year 1 and Year 2 Year 1 Cash flows from operating activities Year 2 0 0 Net cash flow from operating activities Cash flows from investing acivities 0 0 Net cash flow from investing activities Cash flows from financing activities 0 0 Net cash flow from financing activities Net change in cash 0 0 Ending cash balance $ 0 $ 0