During the first week of January 2012, Creative Designs Ltd. began operations. In its second year, Creative Designs approached the local bank for a $20,000 loan and was asked to submit financial statements prepared on an accrual basis. Although the company kept no formal accounting records, it did maintain a record of cash receipts and disbursements. The following information is available for the year ended December 31, 2012:

Additional information
1. Design revenue earned but not yet collected amounted to $2,400.
2. The equipment was purchased at the beginning of January and has an estimated six-year useful life.
3. Supplies on hand on December 31 were $1,260.
4. Rent payments included a $1,500 per month rental fee and a $2,000 deposit that is refundable at the end of the two-year lease.
5. The insurance was paid for a one-year period expiring on January 31, 2013.
6. Salaries earned for the last four days in December and to be paid in January 2013 amounted to $3,050.
7. At December 31, $8,000 is owed for income tax.
Instructions
(a) Calculate the cash balance at December 31, 2012.
(b) Prepare an accrual-based income statement, statement of changes in equity, and statement of financial position for the year.

Cash Receipts 20,000 157,600 Cash Payments Issue of common shares Design revenue Equipment S 35,400 16,800 20,000 3,840 6,800 $ 59,800 1,800 10,000 $154,440 Supplies Rent Insurance Advertisin Telephone Dividends $177,600