B. How much revenue would bell recognize on the year 2 income statement? C. What
ID: 2341161 • Letter: B
Question
B. How much revenue would bell recognize on the year 2 income statement?
C. What is the amount of cash flow from operating activities in year 2?
Clark Bell started a personal financial planning business when he accepted $36,000 cash as advance payment fot financial assets of a large estate. Bell agreed to manage the estate for a one-year period beginning June 1, Year 1. managing the 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. 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 Euity evenuexpenseNer Income Statement of C Assets LiabilitiesEquity Event Flows Retained Earnin Cash 1. Advance payment 2. Revenue earned r: Totals KPrey 4 of 7 Next>
Explanation / Answer
CLARK BELL PERSONAL FINANCIAL PLANNING Horizontal statements model for year 1 Balance sheet Income statement Statement of cash flows Event Assets = Liabilities + Stockholder's equity Revenue - expenses = Net income Cash = Unearned revenue + Retained earnings 1. Advance payment $36000 = $36000 + 0 0 - 0 = 0 $36000 OA 2. Revenue earned 0 + -21000 + 21000 21000 - 0 = 21000 NA Total $36000 = $15000 + $21000 $21000 - 0 = $21000 $36000 OA
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