Answer and Explanation:
The Preparation of income statement, balance sheet, and statement of cash flows for each of the companies is prepared below:-
<u>Income Statement </u>
<u>HOPKINS CPAs </u>
<u> For the year ended December,31 2016 </u>
<u>Particulars Amount</u>
Revenue:
Service Revenue $31,000
Less: Salaries Expense ($19,800)
Net Income $11,200
<u>Balance Sheet </u>
<u>HOPKINS CPAs </u>
<u>As at December 31,2016 </u>
<u>Particulars Amount</u>
Assets
Cash $52,200
Total Assets $52,200
Liabilities:
Notes Payable $41,000
Total Liabilities $41,000
Stockholder's Equity:
Retained Earnings $11,200
Total Stockholder's
Equity $11,200
Total Liabilities and
Stockholder's Equity $52,200
Working Note:
The Cash balance as on 31 December, 2016
= Borrowed amount + Collection from customer - Salary expense
= $41,000 + $31,000 - $19,800
=$52,200
<u>Statement of cash flows </u>
<u> HOPKINS CPAs </u>
<u>For the Year Ended 31, December, 2016 </u>
<u>Particulars Amount</u>
Cash Flows From Operating Activities:
Cash Inflow from Clients $31,000
Cash outflows for Salaries -$19,800
Net Cash Flow from Operating Activities $11,200
Cash Flows From Investing Activities: $0
Cash Flows From Financing Activities:
Cash Inflow from Loan $41,000
Net Cash Flows from Financing Activities $41,000
Net Increase in Cash $52,200
Add: Beginning Cash Balance $0
Ending Cash Balance $52,200
Income Statement
Sports clothing
For the Year Ended 31 December,2016
Particulars Amount
Revenue:
Service Revenue $30,000
Less;Cost of Goods Sold -$16,800
Gross Margin $13,200
Less: Operating Expense -$2,400
Net Income $10,800
<u>Balance Sheet </u>
<u>Sports clothing </u>
<u>As of December 31,2016 </u>
<u>Particulars Amount </u>
Assets:
Cash $48,600
Merchandise Inventory $3,200
Total Assets $51,800
Liabilities:
Notes Payable $41,000
Total Liabilities $41,000
Stockholder's Equity:
Retained Earnings $10,800
Total Stockholder's Equity $10,800
Total Liabilities and
Stockholder's Equity $51,800
Notes:-
Cash balance on 31 December,2016 = Borrowed amount - Purchase of Inventory + Collection from sale of inventory -Operating expense
= $41,000 - $20,000 + $30,000 - $2,400
= $48,600
Merchandise Inventory = Purchase - Cost of goods sold
= $20,000 - $16,800
= $3,200
<u></u>
<u>Statement of Cash Flows </u>
<u> Sports Clothing </u>
<u>For the Year Ended 31, Dec 2016 </u>
<u>Particulars Amount</u>
Cash Flows From Operating Activities
Cash Inflow from Customers $30,000
Less: Inventory for Cash Outflow -$20,000
Less: Expenses for Cash Outflow -$2,400
Net Cash Flow From Operating Activities $7,600
Cash Flow From Investing Activities $0
Cash Flow From Financing Activities
Cash Inflow from Loan $41,000
Net Cash Flow From Financing Activities $41,000
Net Increase in Cash $48,600
Add: Beginning Cash Balance $0
Ending Cash Balance $48,600