Question

Yard Designs (YD) experienced the following events in 2018, its first year of operation:

Answer 1

Answer:

a)

    assets                            =            liabilities              +         equity

    cash                                      deferred revenue             retained earnings

1)   $40,800                               $40,800

2)   $0                                         -$,6800                              $6,800                

    $40,800                               $34,000                              $6,800

     revenues           -          expenses     =         net income         cash flows

1)       $0                                  $0                            $0                   $40,800 OA

2)   $6,800                             $0                        $6,800                   $0       OA

     $6,800                             $0                        $6,800                $40,800 NC

b) Yard Designs

Income Statement

For the year ended December 31, 2018

Revenues           $6,800

Expenses               $0    

Net income        $,6800

Yard Designs

Balance Sheet

For the year ended December 31, 2018

Assets:

Cash $40,800

Total assets                                 $40,800

Liabilities:

Deferred revenue $34,000

Equity:

Retained earnings $6,800

Total liabilities and equity             $40,800

Yard Designs

Statement of Cash Flows

For the year ended December 31, 2018

Cash flows from operating activities:

Net income                                         $6,800

Adjustments to net income:

• Increase in deferred revenue $34,000

Net cash flow from operating act.   $40,800

Cash flows from investing activities:       $0

Cash flows from financing activities:       $0

Net increase in cash                         $40,800

Initial cash balance                                    $0

Ending cash balance                        $40,800

c) $34,000