Preparation and Interpretation of Financial Statements

The following financial statement accounts and amounts are from the records of Jackson Realty for the year ended April 30, 20×7, the company’s first year of operations:

Accounts payable $ 19,000

Accounts receivable 104,000

Cash 90,000

Commissions earned 375,000

Common stock 100,000

Dividends 10,000

Equipment 47,000

Income taxes expense 27,000

Income taxes payable 6,000

Marketing expense 18,000

Office and equipment rent expense 91,000

Salaries and commission expense 172,000

Salaries payable 78,000

Supplies 2,000

Supplies expense 6,000

Utilities expense 11,000

Required

1. Prepare an income statement, statement of retained earnings, balance sheet, and statement of cash flows for Jackson Realty. For examples, refer to Exhibit 5.

2. From the statement of cash flows, does it appear that Jackson Realty will need to borrow money to continue operations? Why or why not?