Problem $2$ Financial Statements $(20$ Points$)$

The adjusted trial balance for Nails Construction as of December $31,2010$ follows:

NAILS COSNTRUCTION

Adjusted Trial Balance

December $31,2010$

Acc no Account Title Debit Credit

$101$ Cash $135,000$

$104$ Short$-$term investments $32,000$

$126$ Supplies $2,700$

$128$ Prepaid Insurance $4,000$

$167$ Equipment $55,000$

$168$ Accumulated Dep. $-$ Equipment $25,000$

$173$ Building $122,000$

$174$ Accumulated Dep. $-$ Building $78,000$

$183$ Land $85,000$

$201$ Accounts Payable $44,500$

$203$ Interest Payable $7,500$

$208$ Rent Payable $2,800$

$210$ Wages Payable $10,700$

$213$ Property Tax Payable $9,000$

$233$ Unearned professional fees $500$

$251$ Long$-$term notes payable $107,000$

$301$ R$.$ Nails Capital $213,900$

$302$ R$.$ Nails, Withdrawals $39,000$

$401117,000$

$406$ Rent earned $7,000$

$407$ Professional fees earned Dividend earned $2,000$

$409$ Interest earned $8,600$

$606$ Depreciation Expense $-$ Building $4,000$

$612$ Depreciation Expense $-$ Equipment $5,000$

$623$ Wages Expense $82,000$

$633$ Interest Expense $1,100$

$637$ Insurance Expense $1,000$

$640$ Rent Expense $34,500$

$652$ Supplies Expense $3,400$

$682$ Postage Expense $200$

$683$ Property Tax Expense $6,500$

$684$ Repairs Expense $18,900$

$688$ Telephone Expense $750$

$690$ Utilities Expense $1,450$

Totals $633,500633,500$

Additional information

$1)$ December $31,2009,$ balance of the R$.$ Nails, Capital account was $$195,900($i$.$e$.$ January $1,2010).$

$2)$ R$.$ Nails invested $$18,000$ cash in the business during year $2010$

Required:

$1.$ Prepare the Income Statement and

$2.$ The Statement of Changes in Equity for the calendar year $2010,$ and

$3.$ The classified balance sheet of December