Problem 2-38 Events for two complete accounting cycles LO 2-1, 2-2, 2-3, 2-4, 2-5, 2-6, 2-7, 2-8

[The following information applies to the questions displayed below.]

Alcorn Service Company was formed on January 1, 2018.

Events Affecting the 2018 Accounting Period

1. Acquired $75,000 cash from the issue of common stock.

2. Purchased $4,200 of supplies on account.

3. Purchased land that cost $48,000 cash.

4. Paid $4,200 cash to settle accounts payable created in Event 2.

5. Recognized revenue on account of $72,000.

6. Paid $36,000 cash for other operating expenses.

7. Collected $53,000 cash from accounts receivable.

Information for 2018 Adjusting Entries

8. Recognized accrued salaries of $4,700 on December 31, 2018.

9. Had $1,700 of supplies on hand at the end of the accounting period.

Events Affecting the 2019 Accounting Period

1. Acquired $35,000 cash from the issue of common stock.

2. Paid $4,700 cash to settle the salaries payable obligation.

3. Paid $8,100 cash in advance to lease office space.

4. Sold the land that cost $48,000 for $48,000 cash.

5. Received $9,300 cash in advance for services to be performed in the future.

6. Purchased $2,500 of supplies on account during the year.

7. Provided services on account of $47,000.

8. Collected $48,000 cash from accounts receivable.

9. Paid a cash dividend of $7,000 to the stockholders.

10. Paid other operating expenses of $34,500.

Information for 2019 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 $1,800 of supplies remaining on hand at the end of the period.

14. Recognized accrued salaries of $5,400 at the end of the accounting period.

15. Recognized $1,900 of accrued interest revenue.

Problem 2-38 Part a

Required

Identify each event affecting the 2018 and 2019 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.

ALCORN SERVICE COMPANY
Accounting Equation for 2019
Event	Type of Event	Assets						=	Liabilities			+	Stockholders Equity
		Cash	Accounts Receivable	Supplies	Prepaid Rent	Land	Interest Receivable	=	Accounts Payable	Salaries Payable	Unearned Revenue	+	Common Stock	Retained Earnings
Bal.		39,800	19,000	1,700	0	48,000		=	0	4,700	0	+	75,000	28,800
1.	AS	35,000						=				+	35,000
2.	AU	(4,700)						=		(4,700)		+
3.	AE	(8,100)			8,100			=				+
4.	AE	48,000				(48,000)		=				+
5.	AS	9,300						=			9,300	+
6.	AS			2,500				=	2,500			+
7.	AS		47,000					=				+		47,000
8.	AE	48,000	(48,000)					=				+
9.	AU	(7,000)						=				+		(7,000)
10.	AU	(34,500)						=				+		(34,500)
11.	AU				(6,750)			=				+
12.	CE							=				+
13.	AU							=				+
14.	CE							=		5,400		+		(5,400)
15.	AS						1,900	=				+
Totals		125,800	18,000	4,200	1,350	0	1,900	=	2,500	5,400	9,300	+	110,000	28,900