Question: The following amounts were taken from the accounting records of Rainbow Consulting Services, Inc., as of July 31, 2007. Rainbow Consulting Services began its operations on August 1, 2006.

Capital stock                                    $ 20,000

Cash                                                 79,000

Dividends                                           50,000

Fees earned                                     676,600

Interest expense                                  9,600

Land                                               251,000

Miscellaneous expense                         15,000

Notes payable                                    80,000

Rent expense                                     72,000

Salaries expense                               160,000

Taxes expense                                   60,000

Utilities expense                                 80,000

Instructions

1. Prepare an income statement for the year ending July 31, 2007.

2. Prepare a retained earnings statement for the year ending July 31, 2007.

3. Prepare a balance sheet as of July 31, 2007.

4. Prepare a statement of cash flows for the year ending July 31, 2007.