The following transactions apply to Artesia Co. for 2009, its first year of operations.

1. Received \($40,000\) cash from the issue of a short-term note with a 5 percent interest rate and a one- year maturity. The note was made on April 1, 2009.

2. Received $ 120,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent.

3. Paid \($72,000\) cash for other operating expenses during the year.

4. Paid the sales tax due on \($100,000\) of the service revenue for the year. Sales tax on the balance of the revenue is not due until 2010.

5. Recognized the accrued interest at December 31, 2009.

The following transactions apply to Artesia Co. for 2010.

1. Paid the balance of the sales tax due for 2009.

2. Received \($145,000\) cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent.

3. Repaid the principal of the note and applicable interest on April 1, 2010.

4. Paid \($85,000\) of other operating expense during the year.

5. Paid the sales tax due on \($120,000\) of the service revenue. The sales tax on the balance of the revenue is not due until 2011.

Required:

a. Organize the transaction data in accounts under an accounting equation.

b. Prepare an income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flow for 2009 and 2010.