The following items are taken from the financial statements of The Red Clothing Company for 2020:

Accounts payable $10,500

Accounts receivable 14,000

Accumulated depreciation-equipment 10,000

Unearned Rent Revenue 5,000

Cash 23,000

Common stock 25,000

Depreciation expense 6,000

Dividends 15,000

Equipment 30,000

Utilities expense 10,000

Rent Expense 14,000

Service Revenue 85,000

Retained earnings, January 1 34,500

Salaries and wages expense 60,000

Rent Revenue 16,000

Instructions (a) Prepare an income statement and a retained earnings statement for the year ended December 31, 2020.