Clark Bell started a personal financial planning business when he accepted $54,0

Question

Clark Bell started a personal financial planning business when he accepted $54,000 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, NC for net change in cash and NA if the account is not affected. (Do not round intermediate calculations and round your final answers to nearest whole number. Enter any decreases to account balances and cash outflows with a minus sign.) CLARK BELL PERSONAL FINANCIAL PLANNING Horizontal Statements Model for Year 1 Balance Sheet Income Statement AssetsLiabilities +Stockholders RevenueExpense Net Income Statement of Cash Event Equity Flows Retained UnearnedEarnings Revenue 1. Advance payment 2. Revenue earned 31,500 OA 22,500 FA 54,000 54,000 54,000+ Totals 54,000 = 54,000+

Explanation / Answer

Cash Unearned revenue Retained earnings Revenue Expenses Net income Statement of cash flows Advance payment 54000 54000 54000 OA Revenue earned -31500 31500 31500 31500 NA Totals 54000 22500 31500 31500 0 31500 54000 NC

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