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Prat Corp. started the Year 2 accounting period with $30,000 of assets (all cash), $12,000 of liabilities, and $13,000 of common stock. During the year, the Retained Earnings account increased by $7,550. The bookkeeper reported that Prat paid cash expenses of $26,000 and paid a $2,000 cash dividend to the stockholders, but she could not find a record of the amount of cash that Prat received for performing services. Prat also paid $3,000 cash to reduce the liability owed to the bank, and the business acquired $4,000 of additional cash from the issue of common stock. Required

a-1. Prepare an income statement for the Year 2 accounting period.

a-2. Prepare a statement of changes in stockholders equity for the Year 2 accounting period.

a-3. Prepare a period-end balance sheet for the Year 2 accounting period.

a-4. Prepare a statement of cash flows for the Year 2 accounting period. (Hint: Determine the amount of beginning retained earnings before considering the effects of the current period events. It also might help to record all events under an accounting equation before preparing the statements.)

b. Determine the percentage of total assets that were provided by creditors, investors, and earnings.

c. Determine the balance in the revenue, expense, and dividends accounts as of January 1, Year 3.

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