Petre Company was started on January 1, Year 1 when it acquired $30,000 from the sale of common stock. During Year 1, the company experienced the following three accounting events:

(1) Earned cash revenues of $14,500,

(2) Paid cash expenses of $9,200, 

(3) Paid a $500 cash dividend to its stockholders. 

These were the only events that affected the company during Year 1.

Required

a. Create an accounting equation and record the effects of each accounting event under the appropriate account headings.

b. Prepare an income statement, statement of changes in stockholders’ equity, and a balance sheet dated December 31, Year 1, for Petre Company.

c. Explain why the income statement uses different terminology to date the income statement than isused to date the balance sheet.