Comprehensive (Appendix) Tina Tunxis is the owner of Valley Sales, a distributor of horticulture supplies. The following is the balance sheet of the company as of December 31, 2006:

Tina keeps very few records and has asked you to help her in the preparation of Valley Sales' 2007 financial statements. An
analysis of the 2007 cash transactions recorded in the company's checkbook indicates deposits and checks as follows:

3. Salaries payable at December 31, 2007, $1,800.
4. Equipment is depreciated by the straight-line method over a 10-year life. The equipment purchased in 2007 was acquired on July 1.
5. Interest payable at December 31, 2007, $140.
6. The company uses a periodic inventory system. Inventory at December 31, 2007, $17,400.

Required
1. Prepare a worksheet to summarize the transactions and adjustments of Valley Sales for 2007.
2. Prepare a 2007 income statement and a balance sheet as of December 31, 2007. (Contributed by Walter A.Parker)

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6,400 1,200 Accounts payable Cash Accounts receivable Inventory Equipment Less: Accumulated depreciation s 2,300 10,400 Salaries payable 12,500 8,000 (6.500 T Tunxis, Capital $19,100 $26,700 $26,700 Total deposits: 173,200; all were collections from customers except for a long-term $10,000 bank loan Checks written: $169,800 summarized as follows: Inventory Salaries Rent Equipment $123,100 4,250 4,800 4,000 Note payments (including interest of $650) 2,650 Office expense Auto expense Withdrawals 3,400 4,100 23,500 Other information about the company is as follows: 1. Accounts receivable at December 31, 2007, $9,200 2. Accounts payable at December 31 S6, 100 300 2006: Inventory 2007: Inventory $8,500 200 Office expense Auto expense