Sentry, Inc. was started on January 1, Year 1 Year 1 Transactions 1. Acquired $20,000 cash by issuing common stock 2. Earned $62,000 of revenue on account. 3. On October 1, Year 1, borrowed $12,000 cash from the local bank. 4. Incurred $3,700 of operating expenses on accoumt. 5. Collected $5,000 cash from accounts receivable. 6. Paid $2,900 cash to pay off a portion of the accounts payable. 7. On December 31, Year 1, Sentry recognized accrued interest expense. The note had a one-year term and an 8 percent annual interest rate. Year 2 Transactions 1. Collected cash for the remaining balance in accounts receivable. 2. Paid cash to settle the remaining balance of accounts payable. 3. On September 30, Year 2, recognized accrued interest expense. 4. On September 30, Year 2, paid cash to settle the balance of the interest payable account 5. On September 30, Year 2, paid cash to settle the notes payable. Required a. Record the events for Year 1 and Year 2 in an accounting equation. At the end of Year 1, total the columns to determine the Year 1 account balances. The Year 1 ending balances become the Year 2 beginning balances. At the end of Year 2, total the columns to determine the account balances for Year 2. b. Prepare an income statement, a statement of changes in stockholders' equity, a balance sheet, and a statement of cash flows for Year 1 and Year 2 c. If the company were liquidated at the end of Year 2, how much cash would be distributed to creditors? How much cash would be distributed to investors? Required A1 Required A2 Required B1 Required B2 Required B3 Required B4 Required C Record the events for Year 1 in an accounting equation. At the end of Year 1, total the columns to determine the Year 1 account balances. (Select "NA" if there is no effect on the "Accounts Titles for Retained Earnings". Enter any decreases to account balances with a minus sign.) SENTRY INC Accounting Equation for Year 1 Assets Liabilities Stockholders' Equity Account Titles for Event Common Stock Retained Retained Earnings Earnings Accounts Accounts Notes Interest Payable Cash Receivable Payable Payable 20,000:+ Beg. 1. Issued stock 2. Revenue on account 3. Loan 4. Expenses on account 5. Accounts receivable Collected 6. Accounts payable payment 7. Interest expense 20,000 + Totals Complete this question by entering your answers in te tabs below Required A1 Required A2Required B1 Required B2 Required B3 Required B4 Required C Record the events for Year 2 in an accounting equation. The Year 1 ending balances become the Year 2 beginning balances. At the end of Year 2, total the columns to determine the account balances for Year 2 (Select "NA" if there is no effect on the "Accounts Titles for Retained Earnings". Enter any decreases to account balances with a minus sign.) SENTRYI Accounting Equation for Year 2 Stockholders' Equity Liabilities Account Titles for Assets Retained Retained Earnings Earnings Common + Stock Notes Interest Accounts Cash Receivable Accounts Event Payable Payable Beg. 1. Accounts receivable collected 2. Accounts payable payment 3. Interest expense 4. Interest payable 5. Notes payable Totals Complete this question by entering your answers in the tabs below. Required A1 Required A2 Required B1 Required B2 Required B3 Required B4 Required C Prepare an income statement for Year 1 and Year 2. SENTRY INC Income Statement For the Period Ended December 31, Year 1 & Year 2 Year 1 Year 2 0 Net income (loss) Complete this question by entering your answers in the tabs below. Required A1 Required A2 Required B3 Required B4 Required C Required B1 Required B2 Prepare a statement of changes in stockholders' equity for Year 1 and Year 2. (Enter losses amount with minus sign.) SENTRY INC Statement of Changes in Stockholders' Equity For the Period Ended December 31, Year 1&Year 2 Year 1 Year 2 Beginning common stock Ending common stock Beginning retained earnings Net income (loss) Ending retained earnings 0 0 Total stockholders' equity Complete this question by entering your answers in the tabs below. Required B21 Required B3 Required A1 Required A2 Required B1 Required B4 Required C Prepare a balance sheet for Year 1 and Year 2. SENTRY INC Balance Sheet December 31, Year 1 & Year2 Year 2 Year 1 Assets 0 Total assets Liabilities Total liabilities Stockholders' Equity Total stockholders' equity Total liabilities and stockholders' equity0 OS Complete this question by entering your answers in the tabs below. Required A1 Required A2 Required B1Required B2 Required B3Required B4Required C Prepare a statement of cash flows for Year 1 and Year 2. (Amounts to be deducted and cash outflows a minus sign.) SENTRY INC Statement of Cash Flows For the Year Ended December 31, Year 1& Year 2 Year 1 Year 2 Cash flows from operating activities Net cash flow from operating activities 0 Cash flows from investing activities Net cash flow from investing activities Cash flows from financing activities Net cash flow from financing activities 0 0 Ending cash balance Complete this question by entering your answers in the tabs below. Required A1 Required A2 Required B1 Required B2 Required B3 Required B4Required C If the company were liquidated at the end of Year 2, how much cash would be distributed to creditors be distributed to investors? Distributed to creditors Distributed to investors