Question

Yard Designs (YD) experienced the following events in 2018, its first year of operation: On October 1, 2018, YD collected $54,000 for consulting services it agreed to provide during the next 12 months. Adjusted the accounts to reflect the amount of consulting service revenue recognized in 2018. Required Based on this information alone: Record the events under an accounting equation. Prepare an income statement, balance sheet, and statement of cash flows for the 2018 accounting period. Ignoring all other future events, what is the amount of service revenue that would be recognized in 2019?

Answer 1

Step-by-step explanation:

2018 Financial Statement

Income Statement :

Amount of recognized revenue = 3/12 * $54,000

Cr Income statement $13,500

Dr Cash/ Bank Account $13,500

Balance Sheet :

Dr. Bank Account -$54,000

Cr Retained earning -$13,500

Cr Deferred Income -$40,500

Statement of Cash Flow :

Cr Operating income $13,500

Cr Increase in payable(deferred income) $40,500

Revenue to Recognize in 2019

Cr Income Statement $40,500

Dr. Deferred Income $40,500