Account for depreciation expense and prepare financial statements. (LO 3, 4)

Northeast Termite Specialists Inc. was started when its owners invested \(\$ 32,685\) in the business in exchange for common stock on July 1, 2010. Part of the cash received to start the company was immediately used to purchase a \(\$ 19,875\) high-pressure chemical sprayer, which had a \(\$ 2,875\) residual value and an expected useful life of 10 years. The company earned \(\$ 68,315\) of cash revenue during the year and had cash operating expenses of \(\$ 27,205\). Prepare an income statement, statement of changes in shareholders' equity, and statement of cash flows for the year ended June 30, 2011, and a balance sheet at June 30, 2011.