Mark$’$s Consulting experienced the following transactions for Year $1,$ its first year of operations, and Year $2.$ Assume that all transactions involve the receipt or payment of cash.

Transactions for Year $1$

Acquired $$55,000$ by issuing common stock.

Received $$105,000$ cash for providing services to customers.

Borrowed $$16,000$ cash from creditors.

Paid expenses amounting to $$59,000.$

Purchased land for $$35,000$ cash.

Transactions for Year $2$

Beginning account balances for Year $2$ are:

Cash $ $82,000$

Land $35,000$ 

Notes payable $16,000$ 

Common stock $55,000$ 

Retained earnings $46,000$ 

Acquired an additional $$21,000$ from the issue of common stock.

Received $$131,000$ for providing services.

Paid $$11,000$ to creditors to reduce loan.

Paid expenses amounting to $$74,000.$

Paid a $$14,500$ dividend to the stockholders.

Determined that the market value of the land is $$45,000.$

Required

a$.$ 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. 

b$-1.$ Prepare an income statement for each year accounting period.

b$-2.$ Prepare a statement of changes in stockholders$’$ equity for each year accounting period.

b$-3.$ Prepare a year$-$end balance sheet for each year accounting period.

b$-4.$ Prepare a statement of cash flows for each year accounting period.

c$.$ Determine the amount of cash that is in the retained earnings account at the end of Year $1$ and Year $2.$

e$.$ Determine the balance in the Retained Earnings account immediately after Event $2$ in Year $1$ is recorded and after Event $2$ in Year $2$ is recorded.

Answer rating: 100% (QA)

a Effects of transactions for Year 1 and Year 2 Accounts Year 1 Year 2 Cash105000 services 16000 not... View the full answer