1- Rescue Records needs rescuing. The downloading of songs over the Internet is killing its business. The owners of Rescue want to know if they made a net income or a net loss during the current year that ended on December 31, Year One. Given the following account balances, prepare an income statement for Rescue similar to the example shown in Figure 3.1. Advertising Expense $4,600 Salary Expense $25,470 Cost of Goods Sold $109,000 Sales Revenue $197,000 Income Tax Expense $3,800 Loss on Sale of Land $12,090 Rent Expense $35,000.

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Chapter 3 Problem 23 23. Your lawn care business, A Cut Above, has grown beyond your wildest dreams, to the point where you would like to buy some new equipment and hire some people to help you. Unfor- tunately, you don't have that kind of money sitting around, so you are applying for a loan. The bank has requested financial statements, including, of course, a balance sheet. The fol- lowing are the balances you have on December 31, Year One. a. Prepare a classified balance sheet to submit to the bank. b. Calculate the current ratio for the end of Year One. c. Calculate the working capital for the end of Year One. Cash $2,400 Prepaid Insurance $1,600 Note Payable Due Two Years from Now (Loan from Mom)$5,000 Capital Stock (Money You Invested to Start Business) $2,000 Accounts Receivable $500 Supplies Inventory $300 Equipment $3,000 Accounts Payable $200 Retained Earnings, 12/31 $600