One year ago, Ralph Collins founded Collins Consignment Sales Company, and the business has prospered. Collins comes to you for advice. He wishes to know how much net income the business earned during the past year. The accounting records consist of the T-accounts in the ledger, which were prepared by an accountant who has moved. The accounts at December 31 follow:

Â	Cash	Accounts receivable	Prepaid rent	Supplies	Â
Dec 31 Bal	5,800	Dec 31 Bal 12300	41641	jan 2	2600
Equipment	Â	Accumulated depreciation		Accounts payable
Jan 2	52,000	Unearned service revenue	Common stock	Dividends	18,500
Salary payable	Â	Dec 31 Bal 12300	41641	Dec 31 Bal	50,000
Service revenue	Â	Â	Salary expense		Â
Dec 31 Bal	Â	Â	Dec 31 Bal	17000	Depreciation expense
Â	80700	Â	Â	Â	Â
Advertising expense	Â	Utilities expense		Supplies expense
Â	Â	Dec 31 Bal	800	Â	Â

Collins indicates that, at year-end, customers owe him $1,000 accrued service revenue, which he expects to collect early next year. These revenues have not been recorded. During the year, he collected $4,100 service revenue in advance from customers, but the business has earned only $800 of that amount. During the year he has incurred $2,400 of advertising expense, but he has not yet paid for it. In addition, he has used up $2,100 of the supplies. Collins determines that depreciation on equipment was $7,000 for the year. At December 31, he owes his employee $1,200 accrued salary. The company issued no stock during the year. Collins expresses concern that dividends during the year might have exceeded the business’s net income. To get a loan to expand the business, Collins must show the bank that the business’s stockholders’ equity has grown from its original $40,000 balance. Has it? You and Collins agree that you will meet again in one week.

Requirement

1. Prepare the financial statement that helps address the first issue concerning Collins. Can he expect to get the loan? Give your reason(s)