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Walters Corporation was formed during 2013 by John Walters. John is the president and sole...

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Accounting

Walters Corporation was formed during 2013 by John Walters. John is the president and sole stockholder. On December 31, 2014, John prepared an income statement for Walters Corporation. John is not an accountant, but he thinks he did a reasonable job preparing the income statement by looking at the financial statements of other companies. He has asked you for advice. Johns income statement appears as follows.

WALTERS CORPORATION Income Statement For the Year Ended December 31, 2014 Accounts receivable $17,000 Service revenue 40,000 Rent expense 10,000 Insurance expense 7,000 Vacation expense 6,000 Net income $34,000 Determine items included in a statement of cash flows, prepare the statement, and comment. Prepare an income statement, retained earnings statement, and balance sheet; discuss results. Net income $4,200 Ret. Earnings $2,600 Tot. assets $78,000 Net increase $26,000 Comment on proper accounting treatment and prepare a corrected income statement.

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