The following are balance sheets of Kang-lyer Financial Consultants:

Required:
Complete the following cash flow statement and prepare an income statement for the year ended December 31, 2008. (Hint: To prepare the income statement, use the information in the balance sheets and the cash flow statement to “solve” for the income statement items. For example, by preparing a T-account for Salaries payable and then incorporating in this account the information on cash paid to employees, you can solve for Salaries expense.)

Transcribed Image Text:

Balance Sheet December 31, 2008 December 31 2008 2007 Cash Accounts receivable $ 30,000 $ 70,000 80,000 15,000 Less: Allowance for doubtful accounts (8,000) (1,500) Prepaid rent -0- 30,000 Land 600,000 400,000 Building 500,000 -0- Less: Accumulated depreciation (10,000) -0- Total assets $1,192,000 $513,500 Salaries payable 100,000 20,000 Interest payable 20,000 5,000 Loan from Village Bank 700,000 200,000 Contributed capital 75,000 30,000 Retained earnings 297,000 258,500 Total liabilities and owners' equity $1,192,000 $513,500