Two-Year Accounting Cycle:
Services to Clients:
In Year 1, the firm provided $380,000 services to Client#1 while collecting $210,000 for services rendered to that client. Client#2 opted to pay USC $130,000 on December 31, Year 1 for work that would not be started until Year 2.
In Year 2, the firm provided $640,000 in services to Client#2 including all of the services for which payment had been received in Year 1. Client#2 paid USC Corporation $440,000 cash in Year 2. Client#1 paid in full the amount owed from services performed for it in Year 1.
Required: Show the changes in the related accounts that would appear in USC's balance sheets dated Dec. 31, Years 1 and 2, as well as in the income statements for the years ending Dec. 31, Year 1 and Year 2.
Consultants:
The seven consultants who work for the USC Corporation each earn $4,600 per month and all began working for the firm on April 1, Year 1. One of the employees asked for and received a $5,000 advance against her salary for Year 2. Another employee asked to delay the payment of his November and December salary for personal reasons and the firm granted his request. All of the other Year 1 salaries were paid in that year. Paydays occur at the end of the month for the month then ending.
On January 1, Year 2, the firm hired three new consultants at a monthly salary of $4,700. On that same date all consultants hired in Year 1 were given a pay raise to $4,900 per month effective immediately. Advances and amounts owed from Year 1 were settled appropriately in Year 2.
Required: Show the changes in the related accounts that would appear in USC's balance sheets dated Dec. 31, Years 1 and 2, as well as in the income statements for the years ending Dec. 31, Year 1 and Year 2.
Two-Year Accounting Cycle (continued): [10940]
Office Rent:
The firm rented and occupied an office on March 1, Year 1, at a monthly cost of $4,200. During Year 1, USC paid $100,000 according to the terms of the rental agreement.
In Year 2, no cash payments to the landlord were made. The next cash payment is scheduled in Year 3 when another $100,000 payment will be due. The monthly rental rate in Year 2 remains unchanged from Year 1.
Required: Show the changes in the related accounts that would appear in USC's balance sheets dated Dec. 31, Years 1 and 2, as well as in the income statements for the years ending Dec. 31, Year 1 and Year 2.
SPECIFY INCREASE OR DECREASE.
Two-Year Accounting Cycle (continued): [051M1.1a]
Supplies:
Supplies were purchased for $32,000 cash during Year 1. Also in Year 1, there were purchases of supplies on account totaling $23,000. At the end of Year 1, $11,000 of supplies had not been used. At the end of Year 1, $6,000 was still owed to suppliers.
In Year 2, supplies were purchased on account for $28,000. Cash payments to suppliers on account in Year 2 totaled $32,000.
Required: Show the changes in the related accounts that would appear in USC's balance sheets dated Dec. 31, Years 1 and 2, as well as in the income statements for the years ending Dec. 31, Year 1 and Year 2.