The following transactions apply to Walnut Enterprises for Year 1, its first year of operations: Received $43,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The note was made on April 1, Year 1. Received $160,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Paid $68,000 cash for other operating expenses during the year. Paid the sales tax due on $107,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2. Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2: Paid the balance of the sales tax due for Year 1. Received $214,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Repaid the principal of the note and applicable interest on April 1, Year 2. Record accrued interest as transaction 3a and the repayment of the principal the note and applicable interest as transaction 3b. Paid $112,000 of other operating expenses during the year. Paid the sales tax due on $199,000 of the service revenue. The sales tax on the balance of the revenue is not due until Year 3. Required: a. Organize the transaction data in accounts under an accounting equation. b-1. Prepare an income statement for Year 1 and Year 2. b-2. Prepare a statement of changes in stockholders’ equity for Year 1 and Year 2. b-3. Prepare a balance sheet for Year 1 and Year 2. b-4. Prepare a statement of cash flows for Year 1 and Year 2.
