After its second year of operations, the following amounts were taken from the accounting records of…

After its second year of operations, the following amounts were taken from the accounting records of Mallard Consulting Services Inc. as of December 31, 2005. Mallard Consulting Services began its operations on January 1, 2004, and uses the cash basis of accounting.

Capital stock

$ 20,000

Cash

?

Dividends

20,000

Fees earned

289,000

Interest expense

6,000

Land

171,000

Miscellaneous expense

8,000

Notes payable

50,000

Rent expense

40,000

Salaries expense

90,000

Taxes expense

20,000

Utilities expense

45,000

Instructions

1. Prepare an income statement for the year ending December 31, 2005.

2. Prepare a retained earnings statement for the year ending December 31, 2005.

Note: The Retained Earnings at January 1, 2005, was $115,000.

3. Prepare a balance sheet as of December 31, 2005.

4. Prepare a statement of cash flows for the year ending December 31, 2005.

Hint: You should compare the asset and liability amounts of December 31, 2005, with those of December 31, 2004, to determine cash used in investing and financing activities. for the December 31, 2004 balance sheet amounts.

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