The following information apples to the questions displayed below.,J Alabama Ser
ID: 2542345 • Letter: T
Question
The following information apples to the questions displayed below.,J Alabama Service Company was formed on January 1, 2014 Events Affecting the 2014 Accounting Perlod 1. Acquired cash of $80,000 from the Issue of common stock. 2. Purchased $5,200 of supplies on account. 3. Purchased land that cost $58,000 cash. 4. Pald $2,800 cash to settle accounts payable created In Event 2. 5. Recognized revenue on account of $82,000. 6. Pald $41,000 cash for other operating expenses. 7. Collected $58,000 cash from accounts recelvable Information for 2014 Adjusting Entries 8. Recognized accrued salaries of $5,200 on December 31, 2014 9. Had $2,200 of supplies on hand at the end of the accounting perlod Events Affecting the 2015 Accounting Perlod 1. Acqulred an additional $40,000 cash from the Issue of common stock. 2. Pald $5,200 cash to settle the salarles payable obligation. 3. Pald $9,600 cash In advance for a lease on offlce facilltles 4. Sold land that had cost $35,000 for $35,000 cash. 5. Recelved $10,800 cash In advance for services to be performed In the future 6. Purchased $3,000 of supplies on account during the year 7. Provided services on account of $52,000 8. Collected $53,000 cash from accounts recelvable 9. Pald a cash dividend of $6,000 to the stockholders 10. Pald other operating expenses of $39,500 Information for 2015 Adjusting Entrles 11. The advance payment for rental of the office facilities (see Event 3) was made on March 1 for a one-year lease term. 12. The cash advance for services to be provided In the future was collected on October 1 (see Event 5). The one-year contract started October 1. 13. Had $2,300 of supplies on hand at the end of the perlod 14. Recognized accrued salarles of $5,900 at the end of the accounting period. 15. Recognized $2,400 of accrued Interest revenueExplanation / Answer
Answer a-1. ALABAMA SERVICE COMPANY Accounting Equation for 2014 Event Type of Event Assets = Liabilities + Stockholders' Equity Cash Accounts Receivable Supplies Prepaid Rent Interest Receivable Land = Accounts Payable Salaries Payable Unearned Revenue + Common Stock Retained Earnings 1 Issue of Common Stock 80,000.00 = + 80,000.00 2 Supplies Purchased 5,200.00 = 5,200.00 + 3 Land Purchased (58,000.00) 58,000.00 = + 4 Cash Paid to Accounts Payable (2,800.00) = (2,800.00) + 5 Revenue Recognized 82,000.00 = + 82,000.00 6 Operating expenses Paid (41,000.00) = + (41,000.00) 7 Cash Collected - Accounts Receivable 58,000.00 (58,000.00) = + 8 Salaries Accrued = 5,200.00 + (5,200.00) 9 Supplies Consumed (3,000.00) = + (3,000.00) = + Balance 36,200.00 24,000.00 2,200.00 - - 58,000.00 = 2,400.00 5,200.00 - + 80,000.00 32,800.00 Total Assets = $120,400 Total Liabilities = $7,600 Total stockholders' Equity = $112,800 Total Liabilities & stockholders' Equity = $120,400 Answer a-2. ALABAMA SERVICE COMPANY Accounting Equation for 2015 Event Type of Event Assets = Liabilities + Stockholders' Equity Cash Accounts Receivable Supplies Prepaid Rent Interest Receivable Land = Accounts Payable Salaries Payable Unearned Revenue + Common Stock Retained Earnings Balance 36,200.00 24,000.00 2,200.00 - 58,000.00 = 2,400.00 5,200.00 - + 80,000.00 32,800.00 1 Issue of Common Stock 40,000.00 - + 40,000.00 2 Salaries Payable Paid (5,200.00) - (5,200.00) + 3 Prepaid Rent Paid (9,600.00) 9,600.00 - + 4 Sale of Land 35,000.00 (35,000.00) - + 5 Advance Recd. From Customers 10,800.00 - 10,800.00 + 6 Supplies Purchased on Credit 3,000.00 - 3,000.00 + 7 Provide Services on Account 52,000.00 - + 52,000.00 8 Cash Collected - Accounts Receivable 53,000.00 (53,000.00) - + 9 Cash Dividend Paid (6,000.00) = + (6,000.00) 10 Operating expenses Paid (39,500.00) = + (39,500.00) 11 Rent Expenses - Current Period (8,000.00) = + (8,000.00) 12 Service Revenue Recognized - (2,700.00) + 2,700.00 13 Supplies Consumed (2,900.00) - + (2,900.00) 14 Salaries Accrued - 5,900.00 + (5,900.00) 15 Interest Revenue - Accrued 2,400.00 - + 2,400.00 - + Balance 114,700.00 23,000.00 2,300.00 1,600.00 2,400.00 23,000.00 - 5,400.00 5,900.00 8,100.00 + 120,000.00 27,600.00 Total Assets = $167,000 Total Liabilities = $19,400 + Total stockholders' Equity = $147,600 Total Liabilities & stockholders' Equity = $167,000 Answer b-1 ALABAMA SERVICE COMPANY Income Statement For the Years Ended Dec 31, 2014 and 2015 2014 2015 Revenue Service Revenue 82,000.00 54,700.00 Interest Revenue - 2,400.00 Total Revenue 82,000.00 57,100.00 Expenses Operating Expense 41,000.00 39,500.00 Supplies Expense 3,000.00 2,900.00 Salaries Expense 5,200.00 5,900.00 Rent Expense 8,000.00 Total Expenses 49,200.00 56,300.00 Net Income 32,800.00 800.00 Answer b-2 ALABAMA SERVICE COMPANY Statement of Changes in Stockholders' Equity For the Years Ended Dec 31, 2014 and 2015 2014 2015 Beginning Common Stock - 80,000.00 Issued During the Year 80,000.00 40,000.00 Ending Common Stock 80,000.00 120,000.00 Beginning Retained Earnings - 32,800.00 Net Income 32,800.00 800.00 Dividend - (6,000.00) Ending Retained Earnings 32,800.00 27,600.00 Total Stockholders' Equity 112,800.00 147,600.00 Answer b-3 ALABAMA SERVICE COMPANY Balance Sheet As of Dec 31, 2014 and 2015 2014 2015 Assets Current Assets Cash 36,200.00 114,700.00 Accounts Receivable 24,000.00 23,000.00 Supplies 2,200.00 2,300.00 Prepaid Rent - 1,600.00 Interest Receivable - 2,400.00 Total Current Assets 62,400.00 144,000.00 Property, Plant & Equipment Land 58,000.00 23,000.00 Total Assets 120,400.00 167,000.00 Liabilities & Stockholders' Equity Liabilities Current Liabilities Accounts Payable 2,400.00 5,400.00 Salaries Payable 5,200.00 5,900.00 Unearned Revenue - 8,100.00 Total Current Liabilities 7,600.00 19,400.00 Long-Term Liabilities - - Total Liabilities 7,600.00 19,400.00 Stockholders' Equity Common Stock 80,000.00 120,000.00 Retained Earnings 32,800.00 27,600.00 Total Stockholders' Equity 112,800.00 147,600.00 Total Liabilities & Stockholders' Equity 120,400.00 167,000.00 Answer b-4 ALABAMA SERVICE COMPANY Statement of Cash Flows For the Years ended Dec 31, 2014 & 2015 2014 2015 Cash Flow from opearating activities: Cash received from Customers 58,000.00 63,800.00 Cash Paid for Operating Expenses (41,000.00) (39,500.00) Cash Paid for Supplies (2,800.00) - Cash Paid for Rent - (9,600.00) Cash Paid for Salaries - (5,200.00) Net Cash provided (used) by operating activities 14,200.00 9,500.00 Cash flow from Investing Activities Purchase of Land (58,000.00) - Sale of land 35,000.00 Net Cash provided (used) by Investing activities (58,000.00) 35,000.00 Cash Flow from Financing Activities Issue of Common Stock 80,000.00 40,000.00 Cash dividend paid - (6,000.00) Net Cash provided (used) by Financing activities 80,000.00 34,000.00 Net Increase / (Decrease) in Cash 36,200.00 78,500.00 Cash balance at the beginning - 36,200.00 Cash balance at the end 36,200.00 114,700.00
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