In: Accounting
Alcorn Service Company was formed on January 1, 2018.
Events Affecting the 2018 Accounting Period
Acquired $20,000 cash from the issue of common stock.
Purchased $800 of supplies on account.
Purchased land that cost $14,000 cash.
Paid $800 cash to settle accounts payable created in Event 2.
Recognized revenue on account of $10,500.
Paid $3,800 cash for other operating expenses.
Collected $7,000 cash from accounts receivable.
Information for 2018 Adjusting Entries
Recognized accrued salaries of $3,600 on December 31, 2018.
Had $100 of supplies on hand at the end of the accounting period.
Events Affecting the 2019 Accounting Period
Acquired $15,000 cash from the issue of common stock.
Paid $3,600 cash to settle the salaries payable obligation.
Paid $9,000 cash in advance to lease office space.
Sold the land that cost $14,000 for $14,000 cash.
Received $6,000 cash in advance for services to be performed in the future.
Purchased $2,400 of supplies on account during the year.
Provided services on account of $24,500.
Collected $12,600 cash from accounts receivable.
Paid a cash dividend of $2,000 to the stockholders.
Paid other operating expenses of $2,850.
Information for 2019 Adjusting Entries
The advance payment for rental of the office space (see Event 3) was made on March 1 for a one-year term.
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.
Had $300 of supplies remaining on hand at the end of the period.
Recognized accrued salaries of $4,800 at the end of the accounting period.
Recognized $500 of accrued interest revenue.
b-1. Prepare an income statement for 2018 and 2019.
b-2. Prepare the statement of changes in stockholders’ equity for 2018 and 2019.
b-3. Prepare the balance sheet for 2018 and 2019.
b-4. Prepare the statement of cash flows for 2018 and 2019, using the vertical statements model