Question: On January 1, 2006 the organizers of Jaylo Corporation obtained their charter and issued 10,000 shares of $5 par value common stock for $7 per share. During 2006 the company earned $60,000 of revenue and collected all but $10,000 of it by year end. Expenses incurred during 2006 totaled $40,000 and all had been paid for during the year. Additionally, at year end there was $500 of salaries for December which had not yet been paid. Also a $1,000 cash dividend was paid during the year.
1) show the effects of each of the above groups of transactions under the appropriate column of the accounting equation, and label each transaction with a 1 or 2 worddescription
2) Using only the information above, prepare, in GOOD FORM, an income statement for 2006
3) Compare the Operating Cash Flow amount to Net Income and explaine why they are different.
4) If the company wants to purchase a $75,000 company vehicle right after year end, how much of a down payment do you recomment to the company make on this vehicle. Explain how you arrived at this amount, listed all the factors you considered.