Milea Inc. experienced the following events in Year 1, its first year of operations: Received $13,500 cash from the issue of common stock. Performed services on account for $45,000. Paid the utility expense of $1,100. Collected $35,270 of the accounts receivable. Recorded $8,100 of accrued salaries at the end of the year. Paid a $1,100 cash dividend to the stockholders.
a. Prepare the income statement
b. Prepare the statement of changes in stockholders' equity
c. Prepare the balance sheet as of December 31.
d. Prepare the statement of cash flows for the Year 1 accounting period.

Explanation:

Income statement

For the year ended December 31, year 1

Revenue:  

Service revenue  45000

Expense:  

Utilities expense1100  

Salary expense8100  

Total expense  9200

Net income  35800

Statement of Changes in Stockholders' Equity

For the Year Ended December 31, Year 1

Beginning common stock:              -    

Common stock issued       13,500  

Ending common stock        13,500

Beginning retained earnings              -    

Net income       35,800

Dividends          (1100)  

Ending retained earnings        34,700

Total stockholders' equity        48,200

Balance Sheet

As of December 31, Year 1

Assets  

Cash(13500+35270-1100-1100)       46,570

Accounts receivable(45000-35270)         9730

Total assets        56,300

Liabilities  

Salaries payable         8100

Total liabilities          8100

Stockholders' Equity  

Common stock       13,500

Retained earnings       34,700

Total stockholders' equity        48,200

Total liabilities and stockholders' equity        56,300

Statement of Cash Flows

For the Year Ended December 31, Year 1

Cash flow from operating activities  

Cash received from customers       35,270

Cash paid for utility expense       (1,100)  

Net cash flow from operating activities        34,170

Cash flow from investing activities                -  

Cash flow from financing activities  

Issuance of common stock       13,500  

Cash paid for dividends          (1100)  

Net cash flow from financing        12,500

Net change in cash        46,670

Beginning cash balance                -  

Ending cash balance        46,670

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