Auto Spa Company was started on January 1, 2013, when the owners invested $120,000 cash in the business. During 2013, the company earned cash revenues of $80,000 and incurred cash expenses of $56,000. The company also paid cash distributions of $5,000.
Required:
Prepare a 2013 income statement, capital statement (statement of changes in equity), balance sheet, and statement of cash flows using each of the following assumptions. (Consider each assumption separately.)
a. Auto Spa is a sole proprietorship owned by B. Burns.
b. Auto Spa is a partnership with two partners, Sue Moore and Jim Pounds. Moore invested $72,000 and Pounds invested $48,000 of the $120,000 cash that was used to start the business. Pounds was expected to assume the vast majority of the responsibility for operating the business. The partnership agreement called for Pounds to receive 60 percent of the profits and Moore the remaining 40 percent. With regard to the $5,000 distribution, Pounds with drew $1,500 from the business and Moore withdrew $3,500.
c. Auto Spa is a corporation. The owners were issued 10,000 shares of $10 par common stock when they invested the $120,000 cash in the business.