Hernandez Company began business operations and experienced the following transactions during Year 1, its first year of operations:1)Issued common stock for $50,000 cash.2)Provided services to customers for $125,000 on account.3)Purchased $2,500 of supplies on account.4)Paid $30,000 cash to rent office space for a 12-month period beginning July 1.5)Collected $115,000 cash from customers.6)Paid cash for $90,000 of operating expenses.7)Adjusted the accounting records to reflect that there was $750 of supplies remaining on hand at year-end.8)Recorded a year-end adjustment to recognize rent expense.Required:a)Record the above transactions on a horizontal statements model, reflecting their effect on the different financial statements.b)Prepare Hernandez Company's income statement, balance sheet and statement of cash flows for the year ended December 31, Year 1.

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The Answer of Hernandez Company began business operations and experienced the following transactions during Year 1, its first year of operations:1)Issued common stock for $50,000 cash.2)Provided services to customers for $125,000 on account.3)Purchased $2,500 of supplies on account.4)Paid $30,000 cash to rent office space for a 12-month period beginning July 1.5)Collected $115,000 cash from customers.6)Paid cash for $90,000 of operating expenses.7)Adjusted the accounting records to reflect that there was $750 of supplies remaining on hand at year-end.8)Recorded a year-end adjustment to recognize rent expense.Required:a)Record the above transactions on a horizontal statements model, reflecting their effect on the different financial statements.b)Prepare Hernandez Company's income statement, balance sheet and statement of cash flows for the year ended December 31, Year 1.

Hernandez Company Began Business Operations and Experienced the Following Transactions