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Yard Designs (YD) experienced the following events in Year 1, its first year of operation:________.
1. On October 1, Year 1, YD collected $26,400 for consulting services it agreed to provide during the coming year.
2. Adjusted the accounts to reflect the amount of consulting service revenue recognized in Year 1.
Required
Based on this information alone:______.
a. Record the events under an accounting equation. (Enter any decreases to account balances with a minus sign.)
b. Prepare an income statement, balance sheet, and statement of cash flows for the Year 1 accounting period. (In statement of cash flows, cash outflows should be indicated with a minus sign.)
c. Ignoring all other future events, what is the amount of service revenue that would be recognized in Year 2?

Respuesta :

jepessoa

Answer:

a)

    assets                            =            liabilities              +         equity

   cash                                      deferred revenue             retained earnings

1)   $26,400                               $26,400

2)   $0                                         -$,6600                              $6,600                

    $26,400                                $19,800                              $6,600

    revenues           -          expenses     =         net income         cash flows

1)       $0                                  $0                            $0                 $26,400 OA

2)   $6,600                             $0                        $6,600                 $0       OA

     $6,600                             $0                        $6,600             $26,400 NC

b) Yard Designs

Income Statement

For the year ended December 31, Year 1

Revenues           $6,600

Expenses               $0    

Net income        $6,600

Yard Designs

Balance Sheet

For the year ended December 31, Year 1

Assets:

Cash $26,400

Total assets                                 $26,400

Liabilities:

Deferred revenue $19,800

Equity:

Retained earnings $6,600

Total liabilities and equity             $26,400

Yard Designs

Statement of Cash Flows

For the year ended December 31, Year 1

Cash flows from operating activities:

Net income                                         $6,600

Adjustments to net income:

  • Increase in deferred revenue  $19,800

Net cash flow from operating act.   $26,400

Cash flows from investing activities:       $0

Cash flows from financing activities:       $0

Net increase in cash                         $26,400

Initial cash balance                                    $0

Ending cash balance                        $26,400

c) $19,800

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