Question

Required information [The following information applies to the questions displayed below.] Milea Inc. experienced the following events in 2018, its first year of operations: 1. Received $15,500 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 $32,820 of the accounts receivable. 5. Recorded $5,250 of accrued salaries at the end of the year. 6. Paid a $1,300 cash dividend to the stockholders. Required a. Record the events in general ledger accounts under an accounting equation. In the last column of the table, provide appropriate account titles for the Retained Earnings amounts. The first transaction has been recorded as an example. (Select "NA" if there is no effect on the "Accounts Titles for Retained Earnings". Enter any decreases to account balances with a minus sign.) MILEA INC. General Ledger Accounts For the Year Ended December 31, 2018 Assets = Liabilities + Stockholders' Equity Cash Accounts Salaries Common Retained Receivable Payable Stock Earnings 15,500 15,500 Event Accounts Titles for Retained Earnings NA Totals

Answer 1

Requirement a:

MILEA INC.
General Ledger Accounts
For the Year Ended December 31,2018
	Assets		=	Liabilities	+	Stockholder's Equity		Account Titles for Retained Earnings
Event	Cash	Accounts Receivable	=	Salaries Payable	+	Common Stock	Retained Earnings
1	15,500					15,500		NA
2		45,000					45,000	Service revenue
3	-1,300						-1,300	Utilities expense
4	32,820	-32,820						NA
5				5,250			-5,250	Salaries expense
6	-1,300						-1,300	Cash dividends
Totals	45,720	12,180	=	5,250	+	15,500	37,150

Requirement b1:

MILEA INC.
Income Statement
For the Year Ended December 31,2018
Service revenue		$45,000
Expenses:
Utilities expense	$1,300
Salaries expense	$5,250
Total expenses		$6,550
Net income		$38,450

Requirement b2:

MILEA INC.
Statement of changes in Stockholder's equity
For the Year Ended December 31,2018
Beginning common stock	$0
Issuance of common stock	$15,500
Ending common stock		$15,500
Beginning retained earnings	$0
Add:Net income	$38,450
Less: Dividends	($1,300)
Ending retained earnings		$37,150
Total stockholder's equity		$52,650

Requirement b3:

MILEA INC.
Balance Sheet
As of December 31,2018
Assets:
Cash	45,720
Accounts receivable	12,180
Total assets		57,900
Liabilities:
Salaries payable	5,250
Total liabilities		5,250
Stockholders' Equity:
Common stock	15,500
Retained Earnings	37,150
Total stockholders' equity		52,650
Total liabilities and stockholders' equity		57,900

Requirement b4:

MILEA INC.
Statement of Cash Flows
For the Year Ended December 31,2018
Cash flows from operating activities:
Paid utilities expense	($1,300)
Cash collected from customers	$32,820
Net cash flow from operating activities (i)		$31,520
Cash flow from investing activities (ii)		$0
Cash flows from financing activities
Issuance of common stock	$15,500
Paid cash dividends	($1,300)
Net cash flow from financing activities (iii)		$14,200
Net change in cash (i+ii+iii)		$45,720
Beginning cash balance		$0
Ending cash balance		$45,720