Answer:
Explanation:
Income Statement	
Sales $ 203,000	
Less: Cost of Goods Sold $-128,000	
Gross Profit $ 75,000	
Operating Expense $ 54,500 
Warranty Expense ($203,000*4%) $ 8,120 
Total Operating Expense $ -62,620	
Operating Income $ 12,380	
Add: Other income/gains 
Interest Revenue $ 478	
Net Income $ 12,858	
Part b-2	Balance Sheet 
Assets: 
Cash $ 91,100	
Inventory $ 47,000	
Interest Receivable ($20,500*7%*4/12) $  478	
Total Assets $ 138,578	
Liabilities: 
Accounts Payable $ 49,100	
Estimated Warranty $ 2,120	
Sales Tax Payable $ 4,000	
Note Payable $ 20,500	
Total liabilities $ 75,720	
Stockholder's Equity 
Common Stock $ 50,000 
Retained Earning $ 12,858 
Total Stockholder's Equity $ 62,858	
Total Liabilities and equity $ 138,578	
Part b-2	Cash Flow 
Cash flow from operating activities: 
Cash from sales $ 219,240 
Cash paid for repairs $ -6,000 
Cash paid for operating expense $ -54,500 
Cash paid for sales tax $ -12,240 
Cash paid for purchases $-125,900 
Total Cash flow from operating activities $ 20,600	
Cash flow from Financing activities: 
Issue of common stock $ 50,000 
Borrowing from bank $ 20,500 
Cash flow from financing activities $ 70,500	
Net Increase/decrease $ 91,100