The following trial balance was drawn from the accounts of Southern Timber Co. as of December 31,
Year 1:

Cash ........................................................$16,000
Accounts receivable ................................18,000
Allowance for doubtful accounts ............2,000
Inventory ..................................................25,000
Accounts payable ......................................9,200
Common stock ........................................30,000
Retained earnings ..................................17,800

Transactions for Year 2
1. Acquired an additional $20,000 cash from the issue of common stock.
2. Purchased $80,000 of inventory on account.
3. Sold inventory that cost $61,000 for $98,000. Sales were made on account.
4. Wrote off $1,500 of uncollectible accounts.
5. On September 1, Southern loaned $10,000 to Pine Co. The note had a 6 percent interest rate and a one-year term.
6. Paid $24,500 cash for salaries expense.
7. Collected $99,000 cash from accounts receivable.
8. Paid $78,000 cash on accounts payable.
9. Paid a $5,000 cash dividend to the stockholders.
10. Accepted credit cards for sales amounting to $5,000. The cost of goods sold was $3,500. The credit card company charges a 4 percent service charge. The cash has not been received.
11. Estimated uncollectible accounts expense to be 1 percent of sales on account.
12. Recorded the accrued interest at December 31, Year 1.

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 flows for Year 2.