Reference no: EM132558149

Question - Gifford Company experienced the following accounting events during Year 1:

1. Started operanons on January1 when it acquired $22,000 cash by Issuing common stock.

2. Earned $20,400 of revenue on account

3. On March 1 collected $38,400 cash as an advance for services to be performed In the future.

4. Paid cash operating expenses of $19,000.

5. Paid a $2,900 cash dividend to stockholders.

6. On December 31, Year 1, adjusted the books to recognize the revenue earned by providing services related to the advance described in Event 3. The contract required Gifford to provide services for a one-year period starting March 1.

7. Collected $17,000 cash from accounts receivable.

Gifford Company experienced the following accounting events during Year 2:

1. Recognized $40,400 of cash revenue.

2. On April 1, paid $12,240 cash for an Insurance policy that provides coverage for one year beginning immediately.

3. Collected $2,200 cash from accounts receivable.

4. Paid cash operating expenses of $23,000.

5. Paid a $5,200 cash dividend to stockholders.

6. On December 31, Year 2, adjusted the books to recognize the remaining revenue earned by providing services related to the advance described in Event 3 of Year 1.

7. On December 31, Year 2, Gifford adjusted the books to recognize the amount of the insurance policyr used during Year 2

Required -

a. Record the events in a ?nancial statements model. The ?rst event is recorded as an example.

b. What amount of revenue would Gifford report on the Year1 Income statement?

c. What amount of cash flow from customers would Gifford report on the Year 1 statement of cash flows?

d. What amount of unearned revenue would Gifford report on the Year1 and Year 2 year-end balance sheets?

e. What are the Year 2 opening balances for the revenue and expense accounts?

f. What amount of total assets would Gifford report on the December 31, Year 1, balance sheet?