Near the end of its first year of operations, December 31, 2015, Creative Designs Ltd. 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 payments. The following information is available for the year ended December 31:

Additional information:
1. Fees from design work 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 purchased on February 1 for a one-year period expiring January 31, 2016.
6. Salaries earned for the last four days in December and to be paid in January 2016 amounted to $3,050.
7. At year end, it was determined that an additional $7,000 is owed for income tax.
Instructions
(a) Calculate the cash balance at December 31.
(b) Prepare an accrual-based (1) income statement, (2) statement of changes in equity, and (3) statement of financial position.

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Cash Recei $ 20,000 157,600 Cash Payments Issue of common shares Fees earned Equipment 35,400 Rent Insurance Income tax Advertising 20,000 3,840 59,800 1,800 0,000 $150,440 Office expense $177,600