The adjusted trial balance of Valley Realty, Inc., at December 31, 2016, follows:

Requirement

1. Prepare Valley Realty’s income statement and statement of retained earnings for the year ending December 31, 2016, and year-end balance sheet. List expenses in decreasing order on the income statement.

2. a. Which financial statement reports Valley Realty’s results of operations? Were operations successful during 2016? Cite specifics from the financial statements to support your evaluation.

b. Which statement reports the company’s financial position?

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Valley Realty, Inc. Adjusted Trial Balance December 31, 2016 DEBIT $ 7,600 13,200 1,400 ACCOUNT CREDIT Cash Accounts Receivable Prepaid Rent Supplies Equipment Accumulated Depreciation, Equipment Accounts Payable 1,200 96,000 $ 13,100 3,975 Unearned Service Revenue 1,945 590 3,250 6,750 Interest Payable Salaries Payable Notes Payable Common Stock 33,500 Retained Earnings Dividends 13,790 23,000 Service Revenue 126,000 Interest Revenue 800 Salaries Expense 41,000 Rent Expense 12,000 Depreciation Expense, Equipment Utilities Expense Interest Expense Supplies Expense 3,300 2,700 1,320 980 $203,700 Total $203.700