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 1. Acquired $75,000 by issuing common stock. 2. Received $125,000 cash for providing services to customers. 3. Borrowed $20,000 cash from creditors. 4. Paid expenses amounting to $55,000. 5. Purchased land for $30,000 cash. Transactions for Year 2 Beginning account balances for Year 2 are: Cash Land Notes payable Common stock Retained earnings 1. Acquired an additional $25,000 from the issue of common stock. 2. Received $135,000 for providing services. 3. Paid $15,000 to creditors to reduce loan. $135,000 30,000 20,000 75,000 70,000 4. Paid expenses amounting to $70,000. 5. Paid a $12,500 dividend to the stockholders. 6. Determined that the market value of the land is $40,000. 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. Provide appropriate titles for these accounts in the last column of the table. 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. Complete this question by entering your answers in the tabs below. Req A Req B1 Req B2 Req B3 Req B4 Req C Req E

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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**Mark's Consulting Transactions Overview for Year 1 and Year 2**

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:**
1. Acquired $75,000 by issuing common stock.
2. Received $125,000 cash for providing services to customers.
3. Borrowed $20,000 cash from creditors.
4. Paid expenses amounting to $55,000.
5. Purchased land for $30,000 cash.

**Transactions for Year 2:**

**Beginning account balances for Year 2 are:**
- Cash: $135,000
- Land: $30,000
- Notes Payable: $20,000
- Common Stock: $75,000
- Retained Earnings: $70,000

1. Acquired an additional $25,000 from the issue of common stock.
2. Received $135,000 for providing services.
3. Paid $15,000 to creditors to reduce loan.
4. Paid expenses amounting to $70,000.
5. Paid a $12,500 dividend to the stockholders.
6. Determined that the market value of the land is $40,000.

**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. Provide appropriate titles for these accounts in the last column of the table.
- **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.
- **d.** Determine the balance in the Retained Earnings account immediately after Event 2 in Year 1 is recorded and after Event 2 in Year 2.

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Expert Solution

Step 1: Meaning of financial statement

Financial statement refers to the statement that is prepared at the end of the period to reflect the actual financial position of the company. These statements comprise an income statement, statement of change in stockholders' equity, balance sheet, and statement of cash flows. Each statement helps in preparing the next statement.

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