Problem:
Valmont Inc. experienced the following events in 2013, its first year of operation:
1. Received $50,000 cash from the issue of common stock.
2. Performed services on account for $67,000.
3. Paid a $5,000 cash dividend to the stockholders.
4. Collected $45,000 of the accounts receivable.
5. Paid $49,000 cash for other operating expenses.
6. Performed services for $10,000 cash.
7. Recognized $2,000 of accrued utilities expense at the end of the year.
Required:
Question 1: Identify the events that result in revenue or expense recognition:
Question 2: Based on your response to Requirement a, determine the amount of net income reported on the 2013 income statement.
Question 3: Identify the events that affect the statement of cash flows.
Question 4: Based on your response to Requirement c, determine the amount of cash flow from operating activities reported on the 2013 statement of cash flows.
Question 5: What is the before- and after-closing balance in the service revenue account? What other accounts would be closed at the end of the accounting cycle?
Question 6: What is the balance of the retained earnings account that appears on the 2013 balance sheet?
Note: Be sure to show how you arrived at your answer.