Hamilton announced the opening of Hamiltons Electronics Services, Inc. (Hamiltons), an electronics repair company that serviced all makes and models of electronic equipment. He was grateful that he had hired Janet Lucas, a local CPA, to handle the accounting for his company after its first year of operation, and he had renewed his contract with her for its second year

Consider below the information Hamilton has giver Lucas, Lucas prepared the following summary of things that had occurred during the company's second year of operations.

1. Throughout the year, the company purchased parts and supplies inventory totaling $75,000. Of the $75,000, $10,000 was cash paid at the time of purchase, and the remaining $65,000 was purchased on account.
2. Total sales for the year were $330,000. Of those, $110,000 were sales on account, $60,000 were cash sales, and $160,000 were credit card sales. The credit card company charged Hamiltons a 2% fee for each sale.
3. The original cost of the parts and supplies inventory used was $69,000.
4. Rent for the facility in which the company operated remained at $1,000 throughout the year. The company had paid for the first two months rent during December of the prior year. It paid for the remaining 10 months rent during the current year.
5. The cost of insurance for the year was $1,200, paid in cash.
6. The company included $5,000 in employees paychecks in January for work done in the prior year.
7. Hamilton decided to write off three accounts during the year because those customers were not likely to pay the combined $4,000 they owed Hamiltons.
8. During the year, employees, including Hamilton, earned $200,000 in salaries and wages, of which $194,000 was included in paychecks to the employees during the year, and the remaining $6,000 would be included in their January paychecks the following year.
9. Remaining operating expenses totaled $10,000, all paid in cash.
10. On April 15, the company paid its prior years taxes of $2,258.
11. On October 1, the company made an interest payment of $3,000 to the local bank. The payment was related to the $25,000 loan the company had obtained the prior October 1 that carried a 12% interest rate, with interest being payable annually on October 1.
12. In December, the company paid the rent for the following January in advance.
13. The total amount that customers owed Hamiltons at the end of the year, after the three accounts had been written off, totaled $20,000.
14. Hamiltons still owed suppliers $10,000 at the end of the second year for the inventory it had purchased.
15. In addition to his salary, the company paid a $10,000 dividend to Hamilton.
16. The companys tax rate was 15%. Hamilton planned to wait until April 15 of his companys third year to pay the income tax bill for its second year of operations.
17. The company still had the truck and equipment it had purchased at the beginning of its first year of operation. At that time, it had paid $30,000 for the truck and $20,000 for the equipment. It was assumed that the truck would have a useful life of five years, and the equipment would have a useful life of four years. Neither the truck, nor the equipment was expected to have any salvage value.

Required:

1. Prepare all journal entries required for Hamiltons second year of operations.
2. Prepare an income statement that summarizes the results of operations for the second year.
3. Prepare a balance sheet as of December 31.
4. Prepare a statement of cash flow for the second year.

Exhibit 1 below shows companys balance sheet for the end of the first year.

Exhibit 1

Hamiltons Electronics Services, Inc.: The Second Year

Balance Sheet as of December 31, End of First Year

Assets Cash	$ 9,000
Accounts receivable	22,000
Parts and supplies inventory	8,500
Prepaid rent	2,000
Investment in XYZ, Inc.	55,000
PP&E	37,500
Total Assets	$134,000
Liabilities Accounts payable	$ 8,200
Wages payable	5,000
Interest payable	750
Loan payable	25,000
Taxes payable	2,258
Stockholders Equity Capital stock	80,000
Retained earnings	12,792
Total Liabilities and Stockholders Equity	$134,000