Question

Exercise 2-8A Effect of accruals on the financial statements LO 2-2, 2-3, 2-4 [The following information applies to the questions displayed below.] Milea Inc. experienced the following events in Year 1, its first year of operations: Received $16,000 cash from the issue of common stock. Performed services on account for $45,000. Paid the utility expense of $1,150. Collected $37,460 of the accounts receivable. Recorded $5,600 of accrued salaries at the end of the year. Paid a $1,050 cash dividend to the stockholders.

Required information Exercise 2-8A Effect of accruals on the financial statements LO 2-2, 2-3, 2-4 [The following information applies to the questions displayed below.) Milea Inc. experienced the following events in Year 1, its first year of operations: 1. Received $16,000 cash from the issue of common stock. 2. Performed services on account for $45,000. 3. Paid the utility expense of $1,150. 4. Collected $37,460 of the accounts receivable. 5. Recorded $5,600 of accrued salaries at the end of the year. 6. Paid a $1,050 cash dividend to the stockholders.

Answer 1

Answer
Balance Sheet
Assets
Cash (16000-1150+37460-1050)	$     51,260
Accounts Receivable (45000-37460)	$       7,540
Total Assets	$     58,800
Liabilities
Salaries Payable	$       5,600
Total Liabilities	$       5,600
Stockholder's Equity
Common Stock	$     16,000
Retained Earnings	$     37,200
Total Stockholder's Equity	$     53,200
Total Liabilities and Total Stockholder's Equity	$     58,800

Working
Income Statement
	Service Revenue			$     45,000
Less:	Expenses:
	Utility Expense		$     1,150
	Salaries Expense		$     5,600	$       6,750
		Net Income		$38,250.00

Statement of Changes in Stockholder's Equity
	Beginning Common Stock	$               -
Add:	Issued	$16,000.00
	Ending Common Stock	$16,000.00
	Beginning Retained Earnings	$               -
Add:	Net Income	$38,250.00
Less:	Dividend	-$1,050.00
	Ending Retained Earnings	$37,200.00
	Total Stockholder's Equity	$53,200.00