The following information is available for two different types of businesses for the Year 1 accounting year. Hopkins CPAs is a service business that provides accounting services to small businesses. Sports Clothing is a merchandising business that sells sports clothing to college students.
Data for Hopkins CPAs:
Borrowed $33,000 from the bank to start the business.
Provided $45,000 of services to clients and collected $45,000 cash.
Paid salary expense of $28,800.Data for Sports Clothing Borrowed $33,000 from the bank to start the business.
Purchased $34,000 inventory for cash. Inventory costing $28,600 was sold for $51,000 cash.
Paid $4,100 cash for operating expenses.
Required:
a. Prepare an income statement, balance sheet, and statement of cash flows for each of the companies. (Statement of Cash Flows only, items to be deducted must be indicated with a negative amount.)

Explanation:

Entries of Data Hopkins:

Entry of borrowing from bank ⇒Dr Bank   $33000

                                                                Cr      Hopkin Capital    $33000

Entry of services revenue⇒ Dr Cash $45000

                                                    Cr        Service revenue $45000

Entry of salary expense⇒Dr  Salary expense $ 28800

                                                  Cr cash                          $28800

Entries of Sports clothing:

Entry of borrowing from bank ⇒Dr Bank   $33000

                                                                Cr      Sports Capital   $33000

Entry of purchases inventory ⇒ Dr inventory $34000

                                                                Cr      Cash      $34000

Entry of sales of inventory⇒a.) Dr  Cost of goods sold  $28600

                                                                   Cr   Inventory                   $28600

                                           (to record cost of sales)

                                                     b.)  Dr  Cash  $51000

                                                                               Cr Sales revenue $51000    

Entry of Operating expense ⇒ Dr Operating expense $4100

                                                              Cash                       $4100

Ledgers Data Hopkins:

Bank =33000

Cash=45000-28800=16200

Capital =33000

Revenue= 45000

Salary expense=28800

Trial balance Data Hopkins:

        33000+16200+28800=33000+45000

Ledges of Sports clothing:

Bank=33000

Cash=51000-34000-4100=12900

Inventory=34000-28600=5400

Capital=33000

Sales revenue=51000

cost of goods sold=28600

Operating expense= 4100

Trial balance Sports clothing:

33000+12900+5400+28600+4100=33000+51000

a.)                                 Income statement

                                      Hopkin CPA

 Service revenue                                                          = $45000

less: Total operating expense

        Salary expense                =$28800

               Total=                                                               (28800)

                                  Gross profit    ⇒                               $ 16200

                                   Income statement

                                      Sports clothing

 Sales revenue                                                          = $51000

less: Cost of goods sold                                          =(28600)

            Gross profit                                                     22400

less: operating expense                                             =(4100)

                                      Net profit                                    18300

                                  Balance sheet Hopkin Cpa

Total Assets=                              

Bank=$33000

Cash=$16200

Shareholder equity :

Hopkin capital= $33000

Retained earning :$16200

                                  Balance sheet Sports clothing

Total Assets=                              

Bank=$33000

Cash=$12900

Inventory=$5400

Shareholder equity :

Hopkin capital= $33000

Retained earning :$18300

                               Cash flow of hopkins CPA

Cash flow from operation

            Net income                                                                     = 16200

Cash flow from Operating activities

  Increase in salaries                                                                =(28800)

Cash flow from financing activities

loan from bank for investing in business                             = 33000

                                                                                                20400

                           Cash flow of Sports clothing

Cash flow from operation

            Net income                                                                     = 18300

Cash flow from Operating activities

  Increase in inventory     =(34000)

Increase in operating expense       =(4100)      

                                                           Total                            =(38100)

Cash flow from financing activities

loan from bank for investing in business                             = 33000

                                                                                        13200

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if you use only 25 for your entertainment and only 200 for the groceries that you really need and take out the 50 per month for the computer then that should be enough