Problem $1-34$B Prepare financial statements for two complete accounting cycles

Marco'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 $$50,000$ by issuing common stock.

Received $$100,000$ cash for providing services to customers.

Borrowed $$15,000$ cash from creditors.

Paid expenses amounting to $$60,000.$

Purchased land for $$40,000$ cash.

Transactions for Year $2$:

Beginning account balances for Year $2$ are:

Acquired an additional $$20,000$ from the issue of common stock.

Received $$130,000$ for providing services.

Paid $$10,000$ to creditors to reduce loan.

Paid expenses amounting to $$75,000.$

Paid a $$15,000$ dividend to the stockholders.

Determined that the market value of the land is $$50,000.$

Required

a$.$ Write an accounting equation and record the effects of each accounting event under the appropri$-$

ate 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. Total

the amounts in the accounts as of December $31,$ Year $1,$ and December $31,$ Year $2.$

b$.$ Prepare an income statement, statement of changes in stockholders' equity, year$-$end balance sheet,

and statement of cash flows for Year $1$ and Year $2.$ Use a multicycle format with Year $1$ and Year $2$

information shown in side$-$by$-$side columns.

c$.$ Determine the amount of cash that is in the Retained Earnings account at the end of Year $1$ and

Year $2.$

d$.$ Compare the information provided by the income statement with the information provided by the

statement of cash flows. Point out similarities and differences.