Copies Express was incorporated on November 20, 2009, and began operating on January 2, 2010. The balance sheet as of the beginning of operations is shown in Exhibit 1.
In preparing financial statements for the first year of operations, the accountant reviewed the record of cash receipts and cash disbursements for Copies Express. This information appears in Exhibit 2
In addition, the accountant examined certain other information relative to operations. These additional items appear in Exhibit 3.
EXHIBIT 1
Copies Express, Inc.

EXHIBIT 2
Copies Express, Inc.

EXHIBIT 3
Other Information Relative to Operations
1. At the end of 2010, Copies Express owed $9,875 to suppliers for the purchase of photocopy supplies for which it had not yet paid.
2. The yearly depreciation expense on the buildings and equipment was $15,000.
3. At the end of 2010, Copies Express was owed $11,000 for copying services by customers who had not yet paid. Copies Express expected that all of these customers would pay within 30 days.
4. An inventory taken of the supplies at year-end revealed that the year's cost of supplies was $60,250.
5. Income taxes for 2010 were expected to be $11,593. They were unpaid as of December 31, 2010.
Questions
1. Prepare an income statement for 2010 and a balance sheet as of December 31, 2010.
2. Be prepared to explain the derivation of each number on these financial statements.

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Balance Sheet As of January 2, 2010 Assets Cash Supplies Building and equipment Land 2,000 24,400 300,000 12,000 $338,400 Total Liabilities and Owners' Equity Accounts payable Bank loan Capital stock s 10,400 24,000 304,000 $338,400 Total Cash Receipts and Disbursements: 2010 Cash receipts: Cash sales $176,450 64.750 $241,200 Collect accounts receivable Total Cash disbursements: Wages and salaries Heat, light, power Additional supplies Selling and administration interest (Note 1) Payment-bank loan (12/31) Payment-accounts payable 85,750 15,000 52,600 28,375 2,880 12,000 10,400 $207,005 Total