Copies Express was incorporated on November 20, and began operating on January 2. The balance sheet as of the beginning of operations is shown in Exhibit 1.

In preparing financial statements for the first year of operations, the accountant reviewed the record of cash receipts and cash disbursements shown in Exhibit 2. The accountant also examined other information relative to operations, which are shown in Exhibit 3.

Assignment

1. Prepare an income statement for the first year of operations and a balance sheet as of December 31 of the year.
2. Be prepared to explain the derivation of each number on these financial statements.