21. Betty Smith is the owner of Accurate Tax Service. For the year ending April 30, 2007, the following information is available for this service business.

At the beginning of this accounting period, the balance in the Betty Smith, Capital account was $32,000. Following is a summary of activities during this accounting period:

Betty Smith, capital withdrawn: $18,600 Revenue from income tax preparation: $71,300 Revenue from monthly clients: $43,800 Salaries expense: $12,500 Advertising expense: $900 Rent expense: $6,000 Automobile expense: $1,300 Offi ce supplies expense: $7,500 Note: You should assume that all profi t (or loss) accrued during this accounting period is absorbed into the Betty Smith, Capital account at the end of the period.

Following are the account balances at the end of this accounting period

(except Betty Smith, Capital):

Cash: $62,500 Accounts receivable: $3,700 Offi ce furniture and fi xtures: $11,300 Offi ce machines and computers: $15,000 Automobile: $9,500 Accounts payable: $1,700

a. Prepare an income statement for the year ending April 30, 2007.

b. Prepare a balance sheet as of April 30, 2007.