The following listing of accounts and their respective balances for MAST Co. Inc. at December 31, 2007, on page 2 needs to be assembled into a set of financial statements.

You are to prepare in good form a:

1) Balance Sheet as of December 31, 2007. Of the total Note Payable balance of $7,000, the portion that is due prior to December 31, 2007, is $1,500.

2) Income Statement (multi-step format) for the year ended December 31,2007. There is no need to segregate the operating expenses into any subunits; you have not been given the information necessary to do so.

3) Statement of Changes in Stockholders' Equity (prepared separately from the income statement) for the year ended December 31,2007.

You do NOT need to prepare a Statement of Cash Flows or any Notes to the financial statements.

Big Hints: The numbers should articulate and the preferred order of preparation is Income Statement, Statement of Changes in Stockholders' Equity, and finally the Balance Sheet. When completed the Balance Sheet should prove that the accounting equation is in balance.

Please note that the Retained Earnings balance shown in the account listing is the beginning of the year balance as it should be; you will need to derive the balance of Retained Earnings at the end of the year. The values of Common Stock and Paid in Capital in Excess of Par did not change from the beginning to the end of the year.

The four accounts that have parenthesis around the numbers, i.e. allowance for doubtful accounts [on customer accounts receivable], accumulated depreciation - furniture & fixtures, accumulated depreciation - vehicles, and sales returns, are all contra accounts; they will be subtracted (hence the parentheses) from the related asset or revenue account.

A good way to approach this problem is to first determine which financial statement each number is associated with and then build the statements in the recommended order.

Table 1 Accounts & Balances for MAST Co. Inc. at December 31, 2007