The accounts of Frequent Ad, an agency that develops marketing materials for print, radio, and television, follow. The agency's first year of operations just ended on January 31, 2014.
|
Accounts Payable
|
$ 19,400
|
Income Taxes Payable
|
$ 560
|
|
Accounts Receivable
|
24,900
|
Marketing Expense
|
6,800
|
|
Advertising Service Revenue
|
165,200
|
Office Rent Expense
|
13,500
|
|
Cash
|
1,800
|
Salaries Expense
|
86,000
|
|
Common Stock
|
5,000
|
Salaries Payable
|
1,300
|
|
Dividends
|
0
|
Supplies
|
1,600
|
|
Equipment Rental Expense
|
37,200
|
Supplies Expense
|
19,100
|
|
Income Taxes Expense
|
560
|
|
|
Required:
1. Prepare Frequent Ad's income statement, statement of retained earnings, and balance sheet.
2. Business application- Review the financial statements and comment on the financial challenges Frequent Ad faces.