Question

Mijka Company was started on January 1, 2018. During 2018, the company experienced the following three accounting events: (1) earned cash revenues of $28,600, (2) paid cash expenses of $13,200, and (3) paid a $1,500 cash dividend to its stockholders. These were the only events that affected the company during 2018.

create a general ledger

Answer 1

To prepare Mijka Company's general ledger for 2018, we must account for cash revenues, cash expenses, and dividends paid. The firm's cash balance will reflect the result of these transactions. Additionally, using a separate example, the accounting profit for a firm with $1 million in sales revenue and various expenses is calculated by subtracting all costs from the sales revenue which in this example would result in a $50,000 profit.

Step-by-step explanation:

The question relates to preparing a general ledger for Mijka Company, which involves recording the financial transactions that occurred within the year 2018. A general ledger will contain accounts for all three events given:

• Cash - Increases by $28,600 from revenues but decreases by $13,200 for expenses and $1,500 for dividends, leaving the ending balance at $13,900.
• Revenues - Shows the total earned cash revenues of $28,600.
• Expenses - Reflects the total cash expenses of $13,200.
• Dividends - Represents the cash paid out to stockholders totaling $1,500.

To illustrate the calculation of a firm's accounting profit, we can use the provided self-check question. The firm's accounting profit would be the sales revenue minus all the costs, which include labor, capital, and materials. So, the accounting profit = $1,000,000 (sales revenue) - ($600,000 labor + $150,000 capital + $200,000 materials) = $50,000.