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Alcorn Service Company was formed on January 1, 2018. Events Affecting the 2018 Accounting Period Acquired...

Alcorn Service Company was formed on January 1, 2018.

Events Affecting the 2018 Accounting Period

  1. Acquired $72,000 cash from the issue of common stock.

  2. Purchased $3,600 of supplies on account.

  3. Purchased land that cost $42,000 cash.

  4. Paid $3,600 cash to settle accounts payable created in Event 2.

  5. Recognized revenue on account of $66,000.

  6. Paid $33,000 cash for other operating expenses.

  7. Collected $50,000 cash from accounts receivable.

Information for 2018 Adjusting Entries

  1. Recognized accrued salaries of $4,400 on December 31, 2018.

  2. Had $1,400 of supplies on hand at the end of the accounting period.

  

Events Affecting the 2019 Accounting Period

  1. Acquired $32,000 cash from the issue of common stock.

  2. Paid $4,400 cash to settle the salaries payable obligation.

  3. Paid $7,200 cash in advance to lease office space.

  4. Sold the land that cost $42,000 for $42,000 cash.

  5. Received $8,400 cash in advance for services to be performed in the future.

  6. Purchased $2,200 of supplies on account during the year.

  7. Provided services on account of $44,000.

  8. Collected $45,000 cash from accounts receivable.

  9. Paid a cash dividend of $4,000 to the stockholders.

  10. Paid other operating expenses of $31,500.

  

Information for 2019 Adjusting Entries

  1. The advance payment for rental of the office space (see Event 3) was made on March 1 for a one-year term.

  2. 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.

  3. Had $1,500 of supplies remaining on hand at the end of the period.

  4. Recognized accrued salaries of $5,100 at the end of the accounting period.

  5. Recognized $1,600 of accrued interest revenue.

  1. b-1. Prepare an income statement for 2018 and 2019.

  2. b-2. Prepare the statement of changes in stockholders’ equity for 2018 and 2019.

  3. b-3. Prepare the balance sheet for 2018 and 2019.

  4. b-4. Prepare the statement of cash flows for 2018 and 2019, using the vertical statements model.

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Expert Solution

ekkarill92 answered 8 months ago
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