Refer to CP12- 4.

Required:
Complete requirements 1 and 2 using the direct method.

Current Year Previous Year Balance Sheet at December 31 Cash Accounts Receivable Equipment $ 8.000 3,500 10,000 $13,500 2,500 11,000 Accumulated Depreciation-Equnt30012.500) $19,000 $24000 Accounts Payable Salaries and Wages Payable Note Payable (long-term) Common Stock Retained Earnings $1,000 1,000 3,000 10,000 $ 2,000 1,500 1,000 10,000 4.500 $19000 $24000 Income Statement $75.000 68.000 Service Revenue Salaries and Wages Expense Depreciation Expense Income Tax Expense Net Income 500 $ 4500