Refer to PB12-4.

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

Data From PB12-4:

Dive In Company was started several years ago by two diving instructors. The company’s comparative balance sheets and income statement are presented below. Additional information is presented on the following page.

Additional Data:
a. Rent is paid in advance each month, and Office Expenses are paid in cash as incurred.
b. An owner contributed capital by paying $200 cash in exchange for the company’s stock.