Marks Consulting experienced the following transactions for Year 1, its first year of operations, and Year 2.

Assume that all transactions involve the receipt or payment of cash.

Transactions for Year 1:

Acquired $20,000 by issuing common stock.

Received $35,000 for providing services to customers.

Borrowed $25,000 cash from creditors.

Paid expenses amounting to $22,000.

Purchased land for $30,000 cash.

Transactions for Year 2:

Beginning account balances for Year 2 are:

Cash $ 28,000

Land 30,000

Notes payable 25,000

Common stock 20,000

Retained earnings 13,000

Acquired an additional $24,000 from the issue of common stock.

Received $95,000 for providing services in Year 2.

Paid $15,000 to reduce notes payable.

Paid expenses amounting to $71,500.

Paid a $3,000 dividend to the stockholders.

Determined that the market value of the land is $47,000.

a. Record the effects of each accounting event under the appropriate headings for each year. Record the amounts of revenue, expense, and dividends in the Retained Earnings column. Provide appropriate titles for these accounts in the last column of the table.

b. Prepare a statement of cash flows for Year 1 and Year 2.

Assets MARK'S CONSULTING Accounting Equation for Year 1 Liabilities Stockholders' Equity Notes + Common Stock + Retained Payable Earnings + Event Account Titles for Retained Earnings Cash + Land = + + 1. 2. + + + + 3. + 4. + + + + 5. Totals + + + + + 0 = 0 0 + 0 Assets MARK'S CONSULTING Accounting Equation for Year 2 Liabilities Stockholders' Equity Notes Retained + Common Stock + Payable Earnings = + Event Account Titles for Retained Earnings Cash Land + + Beg. bal. 1. 2. + + + + + + 3. + + + + 4. 5. 6. + + + + + + + + + + + Totals 0+ 0 = 0 + 0 MARK'S CONSULTING Statement of Cash Flows For the Year Ended December 31, Year 1 & Year 2 Year 1 Cash flows from operating activities: Year 2 $ 0 $ 0 Net cash flow from operating activities Cash flows from investing activities: 0 0 Net cash flow from investing activities Cash flows from financing activities: Net cash flow from financing activities 0 0 Ending cash balance $ 0 $