Need help with questions a, b, c, d and e.
The Double-Entry Accounting System 171 SELF-STUDY REVIEW PROBLEM A step-by-step audio-narrated series of slides is available in the Connect library. The following events apply to the first year of operations for Mestro Financial Services Company: 1. Acquired $28,000 cash by issuing common stock on January 1, 2016. 2. Purchased $1,100 of supplies on account. 3. Paid $12,000 cash in advance for a one-year lease on office space. 4. Earned $23,000 of consulting revenue on account. 5. Incurred $16,000 of general operating expenses on account. 6. Collected $20,000 cash from receivables. 7. Paid $13,000 cash on accounts payable. 8. Paid a $1,000 cash dividend to stockholders. Information for Adjusting Entries 9. There was $200 of supplies on hand at the end of the accounting period. 10. The one-year lease on the office space was effective beginning on October 1, 2016. 11. There was $1,200 of accrued salaries at the end of 2016. Required a. Record the preceding events in general journal format. b. Post the transaction data from the general journal into general ledger T-accounts. c. Prepare an adjusted trial balance. d. Prepare an income statement, statement of changes in stockholders' equity, balance sheet, and statement of cash flows. e. Prepare the appropriate closing entries in general journal format. Solution to Requirement a Event No. Account Title Debit Credit 1 2 3 4 5 6 7 8 9 10 11 Solution to Requirement b MESTRO FINANCIAL SERVICES COMPANY T-Accounts, 2016 Assets Liabilities + Equity Cash Accounts Payable Common Stock Bal. Bal. Bal. Dividends Salaries Payable Accounts Receivable 4. Consulting Revenue Bal. Bal. Supplies General Operating Expenses Bal. Salaries Expense Prepaid Rent Supplies Expense Bal. Rent Expense Solution to Requirement c MESTRO FINANCIAL SERVICES COMPANY Trial Balance December 31, 2016 Account Titles Debit Credit Cash Accounts receivable Supplies Prepaid rent Accounts payable Salaries payable Common stock Dividends Consulting revenue General operating expenses Salaries expense Supplies expense Rent expense Totals Solution to Requirement d MESTRO FINANCIAL SERVICES COMPANY Financial Statements Income Statement For the Year Ended December 31, 2016 $ $ Consulting revenue Expenses General operating expenses Salaries expense Supplies expense Rent expense Total expenses Net income $ Statement of Changes in Stockholders' Equity For the Year Ended December 31, 2016 Beginning common stock Plus: Common stock issued Ending common stock Beginning retained earnings Plus: Net income Less: Dividends Ending retained earnings Total stockholders' equity Balance Sheet As of December 31, 2016 Assets Cash Accounts receivable Supplies Prepaid rent Total assets Liabilities Accounts payable Salaries payable Total liabilities Stockholders' equity Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Statement of Cash Flows For the Year Ended December 31, 2016 Cash flows from operating activities Inflow from customers Outflow for expenses Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities Inflow from issue of common stock Outflow for dividends Net cash flow from financing activities Net change in cash Plus: Beginning cash balance Ending cash balance
