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ACCOUNTING EVENT ANALYSIS AND FINANCIAL STATEMENT PREPARATION.

Wilmot Real Estate Company experienced the following events during its first year of operations:

Received $50,000 in cash from investors as an equity investment.

Borrowed $40,000 in cash from a bank.

Purchased two parcels of land, each costing $15,000, for a total of $30,000 cash. The land was purchased for investment purposes.

Paid $10,000 cash to rent office equipment for the year.

Provided real estate appraisal services valued at $25,000, receiving $20,000 in cash and an account receivable for an additional $5,000.

Paid miscellaneous expenses totaling $11,000 in cash.

Sold one parcel of land, costing $15,000 for $22,000 cash.

Paid a $5,000 cash dividend to shareholders.

Required

Using the balance sheet equation as illustrated in this chapter, identify how each of the above events affect the balance sheet equation A = L + SE. Prepare an income statement, a statement of shareholders' equity, a balance sheet, and a statement of cash flow for the first year of operations. Evaluate the company's financial performance during its first year of operations.