On July 2, 2019, you decided to start up a new business SmartReader Inc., an off-campus bookstore where students can buy textbooks and supplies at reduced prices. The following are summary transactions for the period July 2, 2019 to October 31, 2019, the companys year end.

1. You and several other shareholders invested $20,000 in return for shares in the company.
2. A suitable location is found and rent is $1,000 per month. The lease agreement is for one year (i.e., ends on June 30, 2020). The entire rent for one year is due upon signing of the lease on July 2, 2019.
3. A 6-month bank loan in the amount of $20,000 was obtained on August 1, 2019. The annual interest rate is 9%.
4. Furniture and fixtures are purchased at a cost of $15,000. These are purchased for cash.
5. Books and supplies of $50,000 was purchased on account.
6. An insurance policy was purchased for $1,200 cash. The policy takes effect on July 2, 2019 and expires on June 30, 2020.
7. An additional $120,000 of inventory was purchased on account.
8. Sales for the period ended October 31, 2019 were:

Cash sales - $190,000

Sales on account - $6,000

Cost of goods sold related to the sales amounts to $130,000.

9. A total of $4,000 of the sales made on account were collected.
10. Additional cash disbursements for the year were as follows:

Wages and salaries	$36,000
Advertising	2,000
Miscellaneous expense	1,500
Dividends to shareholders	10,000
Payments on account re: purchases of inventory	120,000
	$169,500

The following adjustments at year end must be made:

11. The furniture and fixtures are expected to last a total of 10 years with no residual value. The straight-line method is used.
12. The adjustment for insurance expense.
13. The interest payable on the bank loan. Credit to Accrued Liabilities.
14. Invoices received but not yet paid amount to $700 for miscellaneous expenses. Credit Accrued Liabilities.
15. Employees are owed a total of $600 for wages and salaries. Credit to Accrued Liabilities.
16. The adjustment for rent expense.
17. The expected income tax rate is 30%. Credit to Accrued Liabilities.

Required: Prepare the following statements with proper headings:

• Multi-step income statement
• Statement of Changes in Equity
• Statement of Financial Position