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Milea Inc. experienced the following events in Year 1, its first year of operations:

1. Received $16,500 cash from the issue of common stock.
2. Performed services on account for $45,000.
3. Paid the utility expense of $1,300.
4. Collected $34,350 of the accounts receivable.
5. Recorded $5,650 of accrued salaries at the end of the year.
6. Paid a $1,050 cash dividend to the stockholders.

b-1. Prepare the income statement. MILEA, INC Income Statement For the Year Ended December 31, Year 1 Expenses Total expenses

Answer 1

Please find below the solution...

income statement
Service revenue			45,000
Expenses
utility expense		1,300
salaries		5,650
Total expenses			6,950
Net income			38,050
Statement of change in stockholder's equity
Beginning common stock			0
Issued during the year			16,500
Ending common stock				16500
Beginning retained earning			0
Addition during the year			37,000
Ending retained earning				37000
Total stockholder's equity				53500
* addition to retained earning during the year = Net income - Dividend
Balance sheet
Asset
Cash	=16500-1300+34,350-1050		48500
Account receivable	=45000-34350		10650
total asset					59150
Liabilities
accrued salaries			5650
Total liabilities					5650
Stockholder's equity
Common stock			16500
retained earning			37000
			0
Total stockholder's equity					53500
Total liabilities and stockholder's equity					59150