Answer and Explanation:
1. The preparation of the balance sheet is presented below:
                                 <u> Squirrel tree services</u>
<u>                                           Balance sheet</u>
<u>                          For the year ended December, 31, 2021</u>
<u>Liabilities                               Amount             Assets                    Amount </u>
<u>and stockholder equity</u>
Liabilities
Account payable                  $15,100        Cash                            $9,500
Salaries payable                   $5,300         Supplies                     $3,600
Note payable                        $38,000       Prepaid insurance    $5,300
Total liabilities                       $58,400      Building                       $90,000
Equity
Common stock                     $40,000
Retained earnings                 $10,000
Total equity                            $50,000
Total liabilities & equity          $108,400   Total assets              $108,400
2. The preparation of the cash flow statement is presented below:
                                 <u> Squirrel tree services</u>
<u>                                    Cash flow statement</u>
<u>                          For the year ended December, 31, 2021</u>
Particulars                    Amount ($)             Amount ($)
Cash flow from operating activities-  
Cash inflows  customers  96,000  
Cash outflows salaries      (40,000)  
Cash outflows supplies     (22,000)  
Net Cash flow from operating activities (A)     34,000
Cash flow from investing activities-  
Sale of investments                   35,800  
Purchase of building                 (98,000)  
Net Cash flow from investing activities (B)     (62,200)
Cash flow from financing activities  
Borrowed from bank                      38,000  
Dividends                                      (15,500)  
Net Cash flow from financing activities (C)             22,500
Net increase in cash (A+B+C)                   (5,700)
Add: Cash at beginning of year                 15,200
Cash at end of year                                     9,500