Balance Sheets As of December 31 Year 2 Year 1 Assets Cash Equipment Accounts receivable Inventory Prepaid rent Accumulated depreciation $70,431 28,527 $40,880 20,920 158,756 174,630 2,305 4,610 259,240 289,960 (143,680) (230,080) Land 188,260 77,760 Total assets $563,839 $378,680 Liabilities Accounts payable (inventory) $62,874 71,320 Salaries payable 28,467 24,400 Stockholders' equity Common stock, $50 par value 248,000 200,000 Retained earnings 224,498 82,960 Total liabilities and equity $563,839 $378,680 Income Statement For the Year Ended December 31, Year 2 Sales $1,501,000 Cost of goods sold (797,732) Gross profit 703,268 Operating expenses Depreciation expense (22,320) Rent expense (26,710) Salaries expense (254,650) Other operating expenses (258,050) Net income $141,538 Other Information 1. Purchased land for $110,500. 2. Purchased new equipment for $100,000. 3. Sold old equipment that cost $130,720 with accumulated depreciation of $108,720 for $22,000 cash. 4. Issued common stock for $48,000.