P2-3 Financial statements The following amounts were taken from the accounting records of Hargrove Services Inc., as of May 31, 20Y7. Hargrove Services began its operations on June 1, 20Y6.

(OBJ/3..., 1. Net income, $113,000)

Capital $30,000 Cash 62,000 Dividends 13,000 Fees earned 300,000 Interest expense 2,000 Land 98,000 Miscellaneous expense 8,000 Notes payable 30,000 Rent expense 28,000 Salaries expense 87,000 Taxes expense 22,000 Utilities expense 40,000 Instructions: 1.) Prepare an income statement for the year ending for May 31, 20Y2. 2.) Prepare a retained earnings statement for the year ending May 31, 20Y7. 3.) Prepare a balance sheet as of May 31, 20Y7. 4.) Prepare a statement of cash flows for the year ending May 31, 20Y7.

P2-4. Financial statements After its second year of operations, the following amounts were taken from the accounting records of Hargrove Services, Inc., as of May 31, 20Y8. Hargrove Services began its operations on June 1, 20Y6 (see Problem P2-3).

(OBJ/5...; 1. Net income, $230,000)

Capital stock $55,000 Cash ? Dividends 40,000 Fees earned 515, 000 Interest expense 3,000 Land 240,000 Miscellaneous expense 11,000 Notes payable 40,000 Rent expense 36,000 Salaries expense 155,000 Taxes expense 28,000 Utilities expense 52,000 Instructions: 1.) Prepare an income statement for the year ending May 31, 20Y8. 2.) Prepare a retained earnings statement for the year ending May 31, 20Y8. ( Note: The retained earnings at June 1, 20Y7, was $100,000.) 3.) Prepare a balance sheet as of May 31, 20Y8. 4.) Prepare a statement of cash flows for the year ending May 31, 20Y8. (Hint: You should compare the asset and liability amounts of May 31, 20Y8, with those of May 31, 20Y7, to determine cash used investing and financing activities. See problem P2-3 above for the May 31, 20Y7, balance sheet amounts.)