Ja-San Company was started on January 1, 2007, when the owners invested $160,000 cash in the business. During 2007, the company earned cash revenues of $90,000 and incurred cash expenses of $65,000. The company also paid cash distributions of $10,000.
Required:
Prepare a 2007 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 seperately.)
a. Ja-San is a sole proprietorship owned by J. Staford.
b. Ja-San is a partnership with two partners, Kim James and Mary Sanders. James invested $100,000 and Sanders invested $60,000 of the $160,000 cash that was used to start the business. Sanders was expected to assume the vast majority of the responsibility for operating the business. The partnership agreement called for Sanders to receive 60 percent of the profits and James the remaining 40 percent. With regards to the $100,000 distribution, Sanders withdrew $3,000 from the business and James withdrew $7,000.
c. Ja-san is a corporation. The owners were issued 10,000 shares of $10 par common stock when they invested the $160,000 cash in the business.