The accounts of Frequent Ad, an agency that develops marketing materials for print, radio, and television, follow. The agency’s first year of operations just ended on January 31, 2014.
Accounts Payable...... $ 19,400
Accounts Receivable ..... 24,600
Advertising Service Revenue... 159,200
A. Francis, Capital...... 5,000*
Cash............. 1,800
Equipment Rental Expense... 37,200
Marketing Expense....... 4,500
Office Rent Expense...... 10,800
Salaries Expense........ 86,000
Salaries Payable....... 1,300
Supplies........... 900
Supplies Expense........ 19,100
Withdrawals........... 0
*Represents the initial investment by the owner.

Required
1. Prepare Frequent Ad’s income statement, statement of owner’s equity, and balance sheet.
2. Review the financial statements and comment on the financial challenges Frequent Ad faces.