Question

Majka Company was started on January 1, Year 1. During Year 1, the company experienced the following three accounting events: (1) earned cash revenues of $29,500, (2) paid cash expenses of $13,500, and (3) paid a $1,800 cash dividend to its stockholders. These were the only events that affected the company during Year 1.

Required
a. Prepare an income statement, statement of changes in stockholders’ equity, and a balance sheet dated December 31, Year 1, for Majka Company.

Answer 1

a) Income statement

For the year ended December 31, Year 1

Revenue	29500
Expense	-13500
Net income	16000

b) Statement of changes in Stockholder's equity

Beginning equity	0
Add: Net income	16000
Less: Dividend	-1800
Ending equity	14200

c) Balance sheet

Assets
Current assets
Cash	14200
Total assets	14200
Liabilities and stockholder's equity
Stockholder's equity
Owner's equity	14200
Total liabilities and stockholder's equity	14200