Exercise 3-7A (Algo) Unearned items on financial statements LO 3-3 Yard Designs (YD) experienced the following events in Year 1, its first year of operation: 1. On October 1, Year 1, YD collected $33,600 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. (Enter any decreases to account balances with a minus sign.) YARD DESIGNS Accounting Equations for the Year 1 Stockholders' Assets Liabilities Event Cash Unearned Equity Retained Revenue Earnings Advance payment Revenue earned 0 0+ 0 b. Prepare an income statement, balance sheet, and statement of cash flows for the Year 1 accounting period. (In statement of cash flows, cash outflows should be indicated with a minus sign.) YARD DESIGNS Income Statement For the Year Ended December 31, Year 1 Revenue ces Expense 0 Net income $ Assets Cash Total assets Liabilities Unearned revenue YARD DESIGNS Balance Sheet As of December 31, Year 1 Total liabilities Stockholders' Equity Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 0 $ 0 YARD DESIGNS Statement of Cash Flows For the Year Ended December 31, Year 1 Cash flows from operating activities Cash receipt from revenue Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities Net change in cash Plus: Beginning cash balance Ending cash balance 0 S SS O c. Ignoring all other future events, what is the amount of service revenue that would be recognized in Year 2? Service revenue to be recognized in Year 2