the exercise #16 You will prepare three financial statements - income statement, statement of owner's equity and balance sheet. Download this template and upload to this dropbox when completed.

16. Payment of Expense in Cash IDENTIFY FastForward pays $700 cash in employee salary 4 PosT Point: We could merge trans- actions 15 and 16 into one compound entry. for work performed in the latter part of December. Salaries Expense 622 bilities Equity ANALYZE Assets Cash 700 Salaries Expense 700 Cash 101 (I) 30,000 (2) 2,500 (5) 4,200 (3) 26,000 1,000 Date Account Titles and Explanation Debit 3 RECORD (6) Salaries Expense 622 700 Cash 1,900 (6) (12) 3,000 (7) (13) 2,400 (15) (16) 700 Accounting Equation Analysis nt: Technology does notE provide the judgment required 5 Exhibit 2.13 shows the ledger accounts (in T-account form) of FastForward after all 16 transadc- to analyze most business trans ions are recorded and posted and the balances computed. The accounts are grouped into three actions. Analysis requires the major columns corresponding to the accounting equation: assets, liabilities, and equity. Note several important points. First, as with each transaction, the totals for the three columns must obey the accounting equation. Specifically, assets equal $42,395 ($4,275 $0 + $9,720 + $2,400 $26,000); liabilities equal $9,200 ($6,200 $3,000); and equity (oormal bal) Decrease equals $33,195 ($30,000- $200+$5,800$300 $1,400 $1,000 $305). These numbers prove the accounting equation: Assets of $42,395 = Liabilities of $9,200 + CreditDebit Equity of $33,195. Second, the common stock, dividends, revenue, and expense ac- counts reflect the transactions that change equity. These account categories underlie the Credit statement of retained earnings. Third, the revenue and expense account balances will be CreditDebitSsummarized and reported in the income statement. Fourth, increases and decreases in the expertise of skilled and ethical Debit and Credit Rules 1 Increase Credit Cash account make up the elements reported in the statement of cash flows