1. Recording the events under an accounting equation is as follows:
                       Assets      =  Liabilities +  Equity
              Cash  +   Supplies              Common Stock + Revenue - Expenses     
1.          $26,500                                                             $26,500
2.                           $7,200   $7,200
3.                            (5,690)                                                                  ($5,690)
Balance $26,500  $1,510   $7,200                             $26,500   -     $5,690
2. The preparation of the income statement, balance sheet, and statement of cash flows for the Year 1 accounting period is as follows:
Yard Professionals
<h3>Income Statement</h3>
For the Year 1 accounting period
Revenue                 $26,500
Supplies Expense     (5,690)
Net income             $20,810
Yard Professionals
<h3>Balance Sheet</h3>
Year 1 accounting period
Cash                               $26,500
Supplies                             $1,510
Total assets                    $28,010
Accounts Payable           $7,200
Equity: Net income          20,810
Total liabilities + equity $28,010
Yard Professionals
<h3>Statement of Cash Flows</h3>
For the Year 1 accounting period
Net income               $20,810
Supplies                        (1,510)
Accounts Payable       7,200
Cash (Operations)  $26,500
3. The balance in the Supplies account as of January 1, Year 2 is $1,510.
4. The balance in the Supplies Expenses account as of January 1, Year 2 is <u>$5,690</u>.
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