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The following financial statements were drawn from the records of Adams Shoes: Assets Cash Accounts receivable Merchandise inventory Balance Sheets As of December 31

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The following financial statements were drawn from the records of Adams Shoes: Assets Cash Accounts receivable Merchandise inventory Balance Sheets As of December 31 Year 2 Year 1 $121,964 $ 26,560 55,601 64,380 131,051 118,570 0 29,800 148,200 Notes receivable Equipment Accumulated depreciation-equipment Land Total assets Liabilities Accounts payable Salaries payable Utilities payable Interest payable Notes payable (long-term) Common stock Retained earnings Total liabilities and equity Income Statement For the Year Ended December 31, Year 2 Sales revenue Cost of goods sold Gross margin Operating expenses Salaries expense Depreciation expense Utilities expense Operating income Nonoperating items Interest expense Loss on the sale of equipment Net income (74,826) 88,500 $470,490 $ 39,399 34,950 509 257,300 (143,790) 57,500 $ 410,320 $ 45,590 27,960 1,018 2,380 63,000 0 0 300,200 95,432 $470,490 242,700 27,672 $ 410,320 $ 589,310 (292,622) 296,688 (180,160) (16,906) (12,080) 87,542 (3,225) (1,110) $ 83,207 Additional Information 1. Sold equipment costing $109,100 with accumulated depreciation of $85,870 for $22,120 cash. 2. Paid a $15,447 cash dividend to owners.

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