Hernandez Company Began Business Operations and Experienced the Following Transactions

Essay

Hernandez Company began business operations and experienced the following transactions during the year beginning January 1, Year 1:Issued common stock for $50,000 cash.Provided services to customers for $125,000 on account.Purchased $2,500 of supplies on account.Paid $30,000 cash to rent office space for a 12-month period beginning July 1, Year 1.Collected $115,000 cash from customers.Paid cash for $90,000 of operating expenses.Adjusted the accounting records to reflect that there was $750 of supplies remaining on hand at year-end.Recorded an end-of-year adjustment to recognize rent expense.Required:Record the above transactions on a horizontal statements model, reflecting their effect on the different financial statements.Prepare Hernandez Company's income statement, balance sheet and statement of cash flows for the year ended December 31, Year 1.