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Question - Cherokee Company began operations when it issued common stock for $112,000 cash. It paid $100,800 cash in advance for a one- year contract to lease delivery equipment for the business. It signed the lease agreement on March 1, Year 1, which was effective immediately. Cherokee received $128,800 of cash revenue in Year 1.
Required -
a. Record the March 1 cash payment and adjustment required as of December 31, Year 1 in general journal format.
b. Show all events in a horizontal statements model.
c. What amount of net income will Cherokee Company report on the Year 1 income statement? What is the amount of net cash flow from operating activities for Year 1? Determine the amount of prepaid rent Cherokee Company would report on the December 31, Year 1, balance sheet.
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