Walters Corporation was formed during 2013 by John Walters. John is the president and sole...
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Walters Corporation was formed during 2013 by John Walters. John is thepresident and sole stockholder. On December 31, 2014, John prepared an incomestatement for Walters Corporation. John is not an accountant, but he thinks he did areasonable job preparing the income statement by looking at the financial statementsof other companies. He has asked you for advice. Johns income statement appearsas follows.
WALTERS CORPORATIONIncome StatementFor the Year Ended December 31, 2014Accounts receivable $17,000Service revenue 40,000Rent expense 10,000Insurance expense 7,000Vacation expense 6,000Net income $34,000Determine items included in a statement of cash flows, prepare the statement, and comment.Prepare an income statement, retained earnings statement, and balance sheet; discussresults.Net income $4,200Ret. Earnings $2,600Tot. assets $78,000Net increase $26,000Comment on proper accounting treatment and prepare a corrected income statement.
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