SECOND PART

Colton Enterprises experienced the following events for Year 1, the first year of operation:

1. Acquired $55,000 cash from the issue of common stock.
2. Paid $14,000 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 $112,000.
4. Incurred operating expenses on account of $45,000.
5. Collected $85,500 cash from accounts receivable.
6. Paid $41,000 cash for salary expense.
7. Paid $36,000 cash as a partial payment on accounts payable.

Adjusting Entries

8. Made the adjusting entry for the expired rent. (See Event 2.)
9. Recorded $6,400 of accrued salaries at the end of Year 1.

Events for Year 2

1. Paid $6,400 cash for the salaries accrued at the end of the prior accounting period.
2. Performed services for cash of $61,000.
3. Purchased $4,800 of supplies on account.
4. Paid $16,500 cash in advance for rent. The payment was for one year beginning April 1, Year 2.
5. Performed services for customers on account for $128,000.
6. Incurred operating expenses on account of $61,500.
7. Collected $109,000 cash from accounts receivable.
8. Paid $59,000 cash as a partial payment on accounts payable.
9. Paid $33,500 cash for salary expense.
10. Paid a $11,000 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 $450 of supplies were still on hand.

c. Prepare a trial balance for Year 1. COLTON ENTERPRISES Trial Balance December 31, Year 1 Account Titles Debit Credit Totals d-1. Prepare an income statement for Year 1. COLTON ENTERPRISES Income Statement For the Year Ended December 31, Year 1 Expenses Total expenses 0 $ 0 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 $ 0 0 d-3. Prepare a balance sheet for Year 1. COLTON ENTERPRISES Balance Sheet As of December 31, Year 1 Assets $ 0 Total assets Liabilities $ 0 Total liabilities Stockholders' equity 0 Total stockholders' equity Total liabilities and stockholders' equity $ 0 d-4. Prepare a statement of cash flows for Year 1. (Amounts to be deducted should be indicated by a minus sign.) COLTON ENTERPRISES Statement of Cash Flows For the Year Ended December 31, Year 1 Cash flows from operating activities: $ 0 Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities: 0 Net cash flow from financing activities Net change in cash 0 Ending cash balance $ 0