Clark Bell started a personal financial planning business when he accepted $55,000 cash as advance payment...

Clark Bell started a personal financial planning business when he accepted $55,000 cash as advance payment for managing the financial assets of a large estate. Bell agreed to manage the estate for a one-year period beginning June 1, Year 1.

Required
a. Show the effects of the advance payment and revenue recognition on the Year 1 financial statements using a horizontal statements model given below. In the Statement of Cash Flows column, use OA to designate operating activity, IA for investing activity, FA for financing activity, and NC for net change in cash. (Do not round intermediate calculations. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells in the "Statement of Cash Flows" column may require an input - leave cells blank if there is no corresponding input needed.)

b. How much revenue would Bell recognize on the Year 2 income statement? (Do not round intermediate calculations and round your final answer to nearest whole number.

enue to be recognized in Year 2

c. What is the amount of cash flow from operating activities in Year 2?

Amount of cash flow from operating activities

Expert Solution

ANSWER

a)

CLARK BELL PERSONAL FINANCIAL PLANNING
Horizontal Statements model for year 1
Event	Balance Sheet			Income Statement			Statement of Cash Flows
	Assets	=Liabilities	+Stockholders Equity	Revenue	-Expense	=Net Income	Statement of Cash Flows
	Cash	Unearned Revenue	Retained Earnings
Advance Payment	55,000.00	55,000.00	-	-	-	-	57,000.00	OA
Revenue Earned	-	- 32,083.33	32,083.33	32,083.33	-	32,083.33	-	NA

b)

22,916.67

c)

0

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ekkarill92 answered 7 months ago

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