Responses in table form for easy understanding. Thanks. Yard Designs (YD) experi
ID: 2328749 • Letter: R
Question
Responses in table form for easy understanding. Thanks.
Yard Designs (YD) experienced the following events in 2018, its first year of operation: 1. On October 1, 2018, YD collected $40,800 for consulting services it agreed to provide during the next 12 months. 2. Adjusted the accounts to reflect the amount of consulting service revenue recognized in 2018. Required Based on this information alone a. Record the events under an accounting equation. b. Prepare an income statement, balance sheet, and statement of cash flows for the 2018 accounting period. c. Ignoring all other future events, what is the amount of service revenue that would be recognized in 2019? Complete this question by entering your answers in the tabs below.Explanation / Answer
(a).
YARD DESIGNS
Accounting Equations for the year 2018
Assets
=
Liabilities
+
Stockholders’ Equity
Event
Cash
=
Unearned Revenue
+
Retained Earnings
Event
$40800
=
$40800
+
$0
Adjusting
$0
=
($10200)
$10200
$40800
=
$30600
+
$10200
(b).
YARD DESIGNS
Income Statement
For the year ended December 31, 2018
Revenue
$10200
Expense
$0
Net income
$10200
YARD DESIGNS
Balance Sheet
As on December 31, 2018
Assets;
Cash
$40800
Total assets
$40800
Liabilities;
Unearned revenue
$30600
Total liabilities
$30600
Stockholders’ Equity;
Retained earnings
$10200
Total stockholders’ equity
$10200
Total liabilities and stockholders’ equity
$40800
YARD DESIGNS
Statement of Cash Flows
For the year ended December 31, 2018
Cash flows from operating activities;
Cash receipt from revenue……………….$40800
Net cash flows from operating activities
$40800
Cash flow from investing activities;
$0
Cash flow from financing activities;
$0
Net change in cash
$40800
Add: Beginning cash balance
$0
Ending cash flow
$40800
(C).
Service revenue to be recognized in 2019 = $30600
Explanation;
Revenue to be recognized in 2019 will be calculated as follow;
($40800 * 9 / 12) = $30600
YARD DESIGNS
Accounting Equations for the year 2018
Assets
=
Liabilities
+
Stockholders’ Equity
Event
Cash
=
Unearned Revenue
+
Retained Earnings
Event
$40800
=
$40800
+
$0
Adjusting
$0
=
($10200)
$10200
$40800
=
$30600
+
$10200
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