5

Item 2

During Year 1, Chung Corporation earned $6,500 of cash revenue and accrued $2,600 of salaries expense.

Required

Based on this information alone:

1. Prepare the December 31, Year 1, balance sheet.
2. Determine the amount of net income that Chung would report on the Year 1 income statement.
3. Determine the amount of net cash flow from operating activities that Chung would report on the Year 1 statement of cash flows.