Answer:
                                 STARK COMPANY  
                              INCOME STATEMENT  
                 FOR THE YEAR ENDED DECEMBER 31  
PARTICULARS                                 AMOUNT
$
Service Revenue                               20,000
<u>Expenses</u>
Supplies expense          200  
Interest expense            500  
Insurance expense        1,800
Utilities expense            1,300
Depreciation expense   2,000
Wages expense             <u>7,500</u>
Total expenses                                  <u>13,300</u>
Net profit                                            <u>6,700</u>
                             STARK COMPANY  
                  STATEMENT OF RETAINED EARNINGS  
                   FOR THE YEAR ENDED DECEMBER 31
                                                                                        Amount
$
Retained earnings December 31 prior year end            14,800
Add- Net income           6,700
Less- Dividends             3,000                                           <u>3,700</u>
Retained earnings, December 31 Current year end     <u>18,500</u>
3.                                          STARK COMPANY  
             BALANCE SHEET FOR THE YEAR ENDED DECEMBER 31
Current Assets
Cash                               10,000
Accounts receivable      4,000  
Office supplies               800  
Prepaid insurance          <u>2,500</u>
Total current asset                           17,300
Non Current Assets
Buildings                            40,000
Less- Accumulated dep.    <u>15,000</u>  
Total Non Current Assets                <u>25,000</u>
Total Assets                                       <u>42,300
</u>
Liabilities
Current liabilities
Accounts payable     1,500  
Interest payable        100  
Notes payable           11,000  
Unearned revenue    800  
Wages payable          <u>400 </u>
Total Current liabilities                 13,800
Long term liabilities
Common stock      10,000
Retained earnings	18,500             <u>28,500</u>
Total liabilities and capital           <u>42,300</u>