In 2010, John Shields applied for the trademark RadioShield with the United States Patent and Trademark Office and was granted the trademark in November 2010. In addition to the filing fees of $375, Shields paid $2,500 to a lawyer who assisted him with the filing process.The following provides a summary of events for 2011:

Prepare RS Inc.s financial statements for fiscal year 2011: a balance sheet for December 31, 2011; and an income statement for the year ended December 31, 2011.

As a shareholder of RS Inc. what can you conclude about the firms overall performance? To what extent do you believe that the companys performance in 2011 is a good indicator of its future prospects?

l. On January 2, 2011, John Shields, together with three investors, established Radiation Shields (RS), Inc. RS Inc. issued 17,000,000 common shares to investors for $2 per share. 2. Also on January 2, 2011, RS Inc. issued an additional 3,000,000 shares which were given to John Shields in exchange for the trademark "RadioShield." This trademark is viewed as a key success factor to the business, because of how well it capsulates the product RS Inc. wants to produce and sell. On January 5, RS Inc. signed a one year licensing agreement with Chemicals, Inc. The licensing period begins February 1, 2011 and the annual fee of $3,000,000 was paid by RS Inc. in full (in cash). 4. RS Inc. contracted with a small, research-oriented chemical engineering company to find the optimal chemical additives and the correct air pressure to ensure the lacquer spray is fast drying and has a smooth and even finish. Towards the end of February 2011, the engineering company delivered the required specifications and several pre-production models and was paid a total of $2,000,000 in cash