Fowler Companys December 31, Year 1 balance sheet showed $1,700 cash, $1,000 common stock, and $700 retained earnings.The company experienced the following event during Year 2.

(1)

On October 1, collected $1,200 in advance for an agreement to provide office space for one year beginning immediately.

Based on this information alone,

the Year 2 balance sheet would show $300 of unearned rent revenue.

the Year 3 balance sheet would show $900 of rent revenue.

the Year 3 income statement would show $900 of rent revenue.

the Year 2 income statement would show $300 of unearned rent revenue.

eBook & Resources eBook: Prepare financial statements that include deferrals.

9. Required information

Hector Companys December 31, Year 1 balance sheet showed $900 cash, $600 supplies, $500 accounts payable, $400 common stock, and $600 retained earnings. The company experienced the following events during year 2.

(1)	Purchased $1,200 of supplies on account.
(2)	Earned $1,800 cash revenue.
(3)	Paid $1,100 cash to reduce accounts payable created in Event 1 above.
(4)	Physical count revealed $200 of supplies on hand at the end of Year 2.

Based on this information, the company would report

All of the answers are correct.

a $700 net cash inflow from operating activities on the Year 2 statement of cash flows.

a $600 balance in the accounts payable account on the Year 2 balance sheet.

a $1,600 supplies expense on the Year 2 income statement.

eBook & Resources eBook: Prepare financial statements that include deferrals.

10. Required information

Brown Companys December 31, Year 1 balance sheet showed $1,800 cash, $200 accounts payable, $600 common stock, and $1,000 retained earnings. The company experienced the following events during year 2.

(1)	On April 1, Year 2 the company paid $1,800 cash to rent office space for the coming year starting immediately.
(2)	Earned $1,700 cash revenue.
(3)	Paid a $300 cash dividend.

Based on this information, the company would report

a $1,050 balance in retained earnings on the Year 2 balance sheet.

All of the answers are correct.

$1,350 balance in a prepaid rent account on the Year 2 balance sheet.

a $1,700 net cash outflow from operating activities on the Year 2 statement of cash flows.