Required information [The following information applies to the questions displayed below.] Colton Enterprises experienced the following events for Year 1, the first year of operation: 1. Acquired $39,000 cash from the issue of common stock. 2. Paid $12,400 cash in advance for rent. The payment was for the period April 1, Year 1, to March 31, Year 2. 3. Performed services for customers on account for $80,000. 4. Incurred operating expenses on account of $37,000. 5. Collected $61,500 cash from accounts receivable. 6. Paid $25,000 cash for salary expense. 7. Paid $29,600 cash as a partial payment on accounts payable. Adjusting Entries 8. Made the adjusting entry for the expired rent. (See Event 2.) 9. Recorded $3,200 of accrued salaries at the end of Year 1. Events for Year 2 1. Paid $3,200 cash for the salaries accrued at the end of the prior accounting period. 2. Performed services for cash of $29,000. 3. Purchased $3,200 of supplies on account. 4. Paid $11,700 cash in advance for rent. The payment was for one year beginning April 1, Year 2. 5. Performed services for customers on account for $96,000. 6. Incurred operating expenses on account of $45,500. 7. Collected $93,000 cash from accounts receivable. 8. Paid $43,000 cash as a partial payment on accounts payable. 9. Paid $31,900 cash for salary expense. 10. Paid a $13,000 cash dividend to stockholders. Adjusting Entries 11. Made the adjusting entry for the expired rent. (Hint: Part of the rent was paid in Year 1.) 12. Recorded supplies expense. A physical count showed that $650 of supplies were still on hand. d-1. Prepare an income statement for Year 1. COLTON ENTERPRISES Income Statement For the Year Ended December 31, Year 1 Service revenue Expenses $ 37,000 28,200 9,300 $80,000 Operating expenses Salaries expense Rent expense 74,500 Total expenses Net income $ 5,500 d-2. Prepare a statement of changes in stockholders' equity for Year 1. COLTON ENTERPRISES Statement of Changes in Stockholders' Equity For the Year Ended December 31, Year 1 $ Total stockholders' equity $ 0 0 0 d-3. Prepare a balance sheet for Year 1. COLTON ENTERPRISES Balance Sheet As of December 31, Year 1 Assets Total assets Liabilities Total liabilities Stockholders' equity Total stockholders' equity Total liabilities and stockholders' equity $ LA 0 0 0 d-4. Prepare a statement of cash flows for Year 1. (Enter any decreases to account balances and cash outflows with a minus sign.) COLTON ENTERPRISES Statement of Cash Flows For the Year Ended December 31, Year 1 Cash flows from operating activities: Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities: Net cash flow from financing activities Not change in cash Ending cash balance $ 0 0 0 0
