David Glaudan organized a new company, CapUniverse Inc. The company operates a store in an area mall and specializes in baseball-type caps with logos printed on them and provides also T-shirt customization service. David, who is never without a cap, believes that his target market is college students and minor league baseball teams. You have been hired to record the transactions occurring in 2021and prepare financial statements.

The company had the following account balances at December 31, 2020: opening balance

Long-Term Investment	16 000	Accumulated Depreciation, Equipment	18 000
Accounts Receivable	19 200	Accounts Payable	12 000
Cash	18 000	Short-Term Investment	2000
Supplies	400	Bank Loan Payable 7%interest rate	30 000
Unearned Revenue	2 000	Common Shares	50 000
Wages Payable	1 600	Inventory	12 000
Retained Earnings	20 000	Equipment	66 000

During 2021, David prepared the following journal entries:

1	Prepaid Insurance		780
		Cash		780
2	Inventory		24,000
		Accounts Payable		24,000
3	Accounts Receivable		36,000
		Sales Revenue		36,000
	Cost of Goods Sold		20,000
		Inventory		20,000
4	Cash		26000
	Accounts Receivable		78,000
		Service Revenue		104,000
5	Accounts Payable		26,000
		Cash		26,000
6	Cash		49,200
		Accounts Receivable		49,200
7	Advertising Expense		2,400
		Cash		2,400
8	Interest Expense		2100
	Bank Loan Payable		6,000
		Cash		8100
9	Cash		600
		Dividend Revenue		600
10	Utilities Expense		3,000
		Cash		3,000
11	Dividends Declared		2,400
		Cash		2,400

In addition, other transactions occurred at end 2021 and have not been recorded in the books):

12a. Paid $20,400 for wages during the year.

12b. The company owed another $400 to the employees for the last week of work in December At year-end.

13. Depreciated the equipment for the year. The company had bought its equipment at the beginning of 2018, and it was expected to last 10 years and have a residual value of $6,000.

14. Made an adjustment for the annual cost of the insurance that expired in 2021 (for your information: David paid $780 for a three-year fire insurance policy beginning January and the transaction has been correctly recorded).

REQUIRED:

1) Prepare a statement of income for 2021 (15 marks).

2) Prepare the closing entries (4 marks).

3) Prepare a statement of financial position for 2021 (19 marks).