Question

The following events pertain to Super Cleaning Company:

1. Acquired $15,200 cash from the issue of common stock.

2. Provided $13,200 of services on account.

3. Provided services for $4,200 cash.

4. Received $2,600 cash in advance for services to be performed in the future.

5. Collected $9,200 cash from the account receivable created in Event 2.

6. Paid $5,200 for cash expenses.

7. Performed $1,300 of the services agreed to in Event 4.

8. Incurred $1,700 of expenses on account.

9. Paid $1,200 cash in advance for one-year contract to rent office space.

10. Paid $1,350 cash on the account payable created in Event 8.

11. Paid a $1,700 cash dividend to the stockholders.

12. Recognized rent expense for nine months’ use of office space acquired in Event 9.

Required

Show the effects of the events on the financial statements using a horizontal statements model like the following one. In the Cash Flows column, use the letters OA to designate operating activity, IA for investing activity, FA for financing activity, and NC for net change in cash. If an account is not affected by the event, leave the cell blank. The first event is recorded as an example. (Do not round intermediate calculations. Enter any decreases to account balances and cash outflows with a minus sign. Not every cell will require entry.)

SUPER CLEANING COMPANY Effect of Events on the Financial Statements Event No. Assets = Liabilities + Stockholders’ Equity Income Statement Statement of Cash Flows Cash + Accounts Receivable + Prepaid Rent = Accounts Payable + Unearned Revenue + Common Stock + Retained Earnings Revenue – Expenses = Net Income 1. 15,200 + + = + + 15,200 + – = 15,200 FA 2. + + = + + + – = 3. + + = + + + – = 4. + + = + + + – = 5. + + = + + + – = 6. + + = + + + – = 7. + + = + + + – = 8. + + = + + + – = 9. + + = + + + – = 10. + + = + + + – = 11. + + = + + + – = 12. + + = + + + – = Bal. + + = + + + – =

Answer 1

SUPER CLEANING COMPANY
Effect of Events on the Financial Statements
Event No.	Assets			Liabilities		Stockholders’ Equity		Income Statement			Statement of Cash Flows
	Cash	Accounts Receivable	Prepaid Rent	Accounts Payable	Unearned Revenue	Common Stock	Retained Earnings	Revenue	Expenses	Net Income
1	15,200					15,200					15,200	FA
2		13200					13200	13200		13200
3	4200						4200	4200		4200	4200	OA
4	2600				2600						2600	OA
5	9200	-9200									9200	OA
6	-5200						-5200		5200	-5200	-5200	OA
7					-1300		1300	1300		1300
8				1700			-1700		1700	-1700
9	-1200		1200								-1200	OA
10	-1350			-1350							-1350	OA
11	-1700						-1700				-1700	FA
12			-900				-900		900	-900
Bal.	21,750	4,000	300	350	1,300	15,200	9,200	18,700	7,800	10,900	21,750	NC