the following information applies to the questions displayed below milea incorporated experienced the…
the following information applies to the questions displayed below milea incorporated experienced the following events in year 1, its first year of operations: 1. received $20,000 cash from the issue of common stock. 2. performed services on account for $56,000. 3. paid the utility expense of $2,500. 4. collected $48,000 of the accounts receivable. 5. recorded $10,000 of accrued salaries at the end of the year. 6. paid a $2,000 cash dividend to the stockholders. b. prepare the income statement, statement of changes in stockholders equity, balance - sheet, and statement of cash flows for the year 1 accounting period. complete this question by entering your answers in the tabs below. prepare the balance sheet for the year 1 accounting period.
Answer
Explanation:
Step1: Analyze cash - related transactions for cash balance calculation
Cash received from stock issue: $20,000$. Paid utility expense: - $2,500$. Collected accounts receivable: $48,000$. Paid dividend: - $2,000$. Cash balance = $20000 - 2500+48000 - 2000=63500$.
Step2: Analyze accounts - receivable transactions
Performed services on account for $56,000$ and collected $48,000$. Accounts - receivable balance = $56000 - 48000 = 8000$.
Step3: Calculate total assets
Total assets = Cash + Accounts - receivable = $63500+8000 = 71500$.
Step4: Determine liabilities
Accrued salaries of $10,000$ is a liability. So total liabilities = $10000$.
Step5: Calculate stockholders' equity
Common stock is $20,000$. Net income calculation: Revenue from services = $56,000$, Expenses: Utility expense = $2,500$, Salaries expense = $10,000$. Net income=$56000-(2500 + 10000)=43500$. Retained earnings = Net income - Dividend = $43500-2000 = 41500$. Total stockholders' equity = Common stock+Retained earnings = $20000 + 41500=61500$.
Income Statement
| Particulars | Amount |
|---|---|
| Revenue | $56,000$ |
| Expenses: | |
| - Utility Expense | $2,500$ |
| - Salaries Expense | $10,000$ |
| Total Expenses | $12,500$ |
| Net Income | $43,500$ |
Statement of Changes in Stockholders' Equity
| Particulars | Amount |
|---|---|
| Common Stock, Beginning | $0$ |
| Issuance of Common Stock | $20,000$ |
| Common Stock, Ending | $20,000$ |
| Retained Earnings, Beginning | $0$ |
| Net Income | $43,500$ |
| Dividends | $- 2,000$ |
| Retained Earnings, Ending | $41,500$ |
| Total Stockholders' Equity | $61,500$ |
Balance Sheet
| Assets | Amount | Liabilities and Stockholders' Equity | Amount |
|---|---|---|---|
| Cash | $63,500$ | Liabilities: | |
| Accounts Receivable | $8,000$ | Salaries Payable | $10,000$ |
| Total Assets | $71,500$ | Stockholders' Equity: | |
| Common Stock | $20,000$ | ||
| Retained Earnings | $41,500$ | ||
| Total Stockholders' Equity | $61,500$ | ||
| Total Liabilities and Stockholders' Equity | $71,500$ |
Statement of Cash Flows
| Particulars | Amount |
|---|---|
| Operating Activities: | |
| - Cash received from customers | $48,000$ |
| - Cash paid for utilities | $-2,500$ |
| Net cash from operating activities | $45,500$ |
| Investing Activities | $0$ |
| Financing Activities: | |
| - Cash received from stock issuance | $20,000$ |
| - Cash paid for dividends | $-2,000$ |
| Net cash from financing activities | $18,000$ |
| Net increase in cash | $63,500$ |
| Cash at beginning | $0$ |
| Cash at end | $63,500$ |
Answer:
Income Statement, Statement of Changes in Stockholders' Equity, Balance Sheet and Statement of Cash Flows are presented above with calculated values for each line - item.