Milea Inc. experienced the following events in 2016, its first year of operations:

1. Received $20,000 cash from the issue of common stock.

2. Performed services on account for $56,000.

3. Paid the utility expense of $2,500.

4. Collected $48,000 of the accounts receivable.

5. Recorded $10,000 of accrued salaries at the end of the year.

6. Paid a $2,000 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.

b. Prepare the income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for the 2016 accounting period.

c. Why is the amount of net income different from the amount of net cash flow from operating activities? 

MILEA INC. General Ledger Accounts Acct. Titles Event Assets Liabilities Stockholders' Equity for Ret. Earn. Salaries Payable Accounts Common Retained Cash Receivable Stock Earnings 1. 20,000 20,000