Susan\'s Consulting Services experienced the following transactions for 2010, th

Question

Susan's Consulting Services experienced the following transactions for 2010, the first year of operations and 2011 Assume that all transactions involve the receipt or payment of cash Transactions for 2010 1 Acquired $70,000 by issuing common stock 2. Received $120,000 for providing services to customers 3. Borrowed $19,000 cash from creditors 4. Paid expenses amounting to $56,000 5. Purchased land for $35,000 cash Transactions for 2011 Beginning account balances for 2011 are Cash Land Notes payable Common stock Retained earnings $118,000 35,000 19,000 70,000 64,000 1. 2. 3. 4. 5. 6. Acquired an additional $24,000 from the issue of common stock Received $134,000 for providing services in 2011 Paid $14,000 to reduce notes payable Paid expenses amounting to $71,000 Paid a $13,000 dividend to the stockholders Determined that the market value of the land is $45,000 Requirement 1 Record the effects of each accounting event under the appropriate headings for each year. Record the amounts of revenue, expense, and dividends in the Retained Earnings column. Provide appropriate titles for these accounts in the last column of the table. (Leave no cells blank be certain to enter "O" and select "NA" wherever required. Amounts to be deducted should be indicated with minus sign. Omit the "$" sign in your response.)

Explanation / Answer

Susan consulting services (2010) Event Cash Land Notes common Retained Account title/ payable stock Earnings RE 1.Issued stokc      70,000.00    70,000.00 common stock 2.Revenue    120,000.00    120,000.00 Retained earnings 3.Loan      19,000.00      19,000.00 Notes payable 4.Paid expense    (56,000.00)    (56,000.00) Retained earnings 5.Purchase land    (35,000.00)      35,000.00 land totals    118,000.00      35,000.00      19,000.00    70,000.00      64,000.00 2011 Event Cash land Notes payable Common Retained Account title/ stock earnings Retained earnings Beginning balances    118,000.00      35,000.00      19,000.00    70,000.00      64,000.00 1.Issued stock      24,000.00    24,000.00 Common stock 2.Revenue    134,000.00    134,000.00 Retained earnings 3.Paid loan    (14,000.00)    (14,000.00) Notes payable 4.Paid expenses    (71,000.00)    (71,000.00) Retained earnings 5.Paid dividends    (13,000.00)    (13,000.00) Dividends 6.Land value                     -                       -   totals    178,000.00      35,000.00        5,000.00    94,000.00    114,000.00 Requirement 2 income statement 2010 Service revenue    120,000.00 expenses    (56,000.00) net income      64,000.00 Statement of changes in stockholer's equity opening balance 0 add : issued common stock 70,000      70,000.00 Add:Net income      64,000.00 Total stockholer's equity    134,000.00 Balance sheet Assets Cash 118,000 land 35,000 total assets    153,000.00 liabiltiies notes payable      19,000.00 Stockholder's equity common stock      70,000.00 Retained earnings      64,000.00 total stockholer's equity    134,000.00 total liabiltiies and stockholder's equity    153,000.00 Statement of cash flow Cash flow from operating activities Cash from services    120,000.00 Cash paid for expenses      56,000.00 Net cash from operating activities      64,000.00 Net cash flow from investing activities Cash paid for purchase of land    (35,000.00) Net cash flow from investing activities    (35,000.00) Net cash flow from financing activities cash from notes payable      19,000.00 Cash from stock issue      70,000.00 Net cash flow from financing activities      89,000.00 net cash increase (Ending cash balance)    118,000.00 income statement 2011 Service revenue 134,000 Expenses 71,000 Net income 63,000 Statement of changes in stockholders equity opening balance    134,000.00 Add:Stock issue      24,000.00 total    158,000.00 Net income 63,000 Dividends paid -13,000      50,000.00 Closing balance    208,000.00 Balance sheet assets Cash 178,000 land 35,000 total assets 213,000 liabilities Notes payable 5,000 Stockholder's equity common stock 94,000 Retainted earnings 114,000 total stockholder's equity 208,000 total liability and equity 213,000 Statement of cash flow cash flow from operating activities Cash from services 134,000 cash paid for expenses 71,000 cash flow from operating activities 63,000 Cash flow from investing activities 0 Cash flow from financing acitivities cash from stock issue 24,000 cash paid for notes payable -14,000 Cash dividend paid -13,000 Cash from financing activties -3,000 Net cash increase 60,000 Cash at the beginning 118,000 Cash at the end 178,000

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