As the accountant for Wheatley International, it is your job to prepare the company’s income statement and balance sheet. Use the accounts listed below to construct the statements. Assume that the tax rate is 25%.

I recommend that you should first go through each account and determine if it is a balance sheet account (i.e., asset, liability, or owners' equity) or income statement account (i.e., revenue, costs of goods sold, expense, or net income). Hint: ending inventory goes on both the balance sheet and income statement; on the income statement, both beginning and ending inventory are used to calculate cost of goods sold.

Account Dollar Value
Accounts Receivable $120,600
Land $1,500,000
Notes Receivable $61,200
Insurance Expenses $54,000
Accounts Payable $45,000
Interest Expenses $24,600
Common Stock $1,896,000
Accumulated Depreciation $400,000
Net Sales $1,053,000
Ending Inventory $126,600
Notes Payable (Long-term) $210,000
Beginning Inventory $154,800
Retained Earnings $1,459,800
Advertising Expense $90,000
Cash $72,000
Salaries Expense $180,000
Short-Term Notes Payable $15,600
Merchandise Purchased (for inventory) $316,800
Buildings $1,050,000
Rent Expense $13,800
Utilities Expense $8,400
Equipment & Vehicles $1,066,000
Goodwill $90,000
Bonds Payable $60,000

This is a tough assignment. The important thing is to understand is if accounts are balance sheet accounts (i.e., assets, liabilities, or owners' equity) or income statement accounts (i.e., revenue, cost of goods sold, expense, or net income). Additionally, it's important to understand the fundamental accounting equation (A = L + OE).