12. Shallow Waters Company was started several years ago by two diving instructors. The company's comparative balance sheets and income statement are presented below, along with additional information.

12. Shallow Waters Company was started several years ago by two diving instructors. The company's comparative balance sheets and income statement are presented below, along with add urrent Year Prior Year Balance Sheet at December 31 4,000 4,500 900 170 1,200 Accounts receivable Prepaid expenses Equipment 500 5,810 $ 5,570 Wages payable Contributed capital Retained earnings 490$ 1,250 1,700 620 2,500 2,820 S 5,810 S 5,570 Income Statement for Current Year Lessons revenue Wages expense Other expenses Net income $38,450 34,000 4250 S 200 Additional Data a. Prepaid expenses relate to rent paid in advance b. Other expenses were paid in cash c. Purchased equipment for $500 cash at the end of the prior year to be used starting in current year d. An owner contributed capital by paying $800 cash in exchange for the company's stock