One year ago, Ralph Collins founded Collins Consignment Sales Company, and the business has prospered. Collins comes to you for advice. He wishes to know how much net income the business earned during the past year. The accounting records consist of the T-accounts in the ledger, which were prepared by an accountant who has moved. The accounts at December 31 follow:

Collins indicates that, at year-end, customers owe him $1,000 accrued service revenue, which he expects to collect early next year. These revenues have not been recorded. During the year, he collected $4,100 service revenue in advance from customers, but the business has earned only $800 of that amount. During the year he has incurred $2,400 of advertising expense, but he has not yet paid for it. In addition, he has used up $2,100 of the supplies. Collins determines that depreciation on equipment was $7,000 for the year. At December 31, he owes his employee $1,200 accrued salary. The company issued no stock during the year. Collins expresses concern that dividends during the year might have exceeded the business€™s net income. To get a loan to expand the business, Collins must show the bank that the business€™s stockholders€™ equity has grown from its original $40,000 balance. Has it? You and Collins agree that you will meet again in one week.
Requirement
1. Prepare the financial statement that helps address the first issue concerning Collins. Can he expect to get the loan? Give yourreason(s).

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Accounts receivable Dec 31 Bal 12,300l Prepaid rent Jan 2 2,800 Cash Supplies Jan 2 2,600 Dec 31 Bal 5,800 Accumulated depreciation Accounts payable Dec 31 Bal 18,500 Equipment Jan 2 52,000 | Unearned service revenue | Dec 31 Bal 4,100 Salary payable Common stock Dividends | Jan 2 40,000 Dec 31 Bal 50,000 Service revenue Dec 31 Bal 80,700 Salary expense Dec 31 Bal 17,000l Depreciation expense Advertising expense Utilities expense Supplies expense Dec 31 Bal 800