Exercise 2-17A Unearned items on financial statements LO 2-7 Yard Designs (YD) experienced the following events in Year 1, its first year of operation: 1. On October 1, Year 1, YD collected $54,000 for consulting services it agreed to provide during the coming year. 2. Adjusted the accounts to reflect the amount of consulting service revenue recognized in Year 1. Required Based on this information alone: a. Record the events under an accounting equation. b. Prepare an income statement, balance sheet, and statement of cash flows for the Year 1 accounting period. c. Ignoring all other future events, what is the amount of service revenue that would be recognized in Year 2? YARD DESIGNS Accounting Equations for the Year Assets Liabilities Stockholders' Equity Cash Unearned Retained Revenue Earnings Event + Event Adj. + + + 0 = 0 + 0 YARD DESIGNS Income Statement For the Year Ended December 31, Year 1 $ 0 YARD DESIGNS Balance Sheet As of December 31, Year 1 Assets $ 0 Total assets Liabilities Total liabilities $ 0 Stockholders' Equity 0 Total stockholders' equity Total liabilities and stockholders' equity 0 YARD DESIGNS Statement of Cash Flows For the Year Ended December 31, Year 1 Cash flows from operating activities $ 0 Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities Net change in cash 0 Ending cash balance $ 0 Service revenue to be recognized in Year 2