Q1) The following events happened at Handsome Hounds Grooming Company in its first year of business:
a) To establish company, two owners contributed a total of $50,000 in exchange for common stock.
b) Grooming service revenue for first year amounted to $150,000 of which $40,000 was on account.
c) Customers owe $10,000 at the end of year from services given on account.
d) At the starting of year, a storage building was rented. Company was needed to sign three-year lease for $12,000 per year and make $2,000 refundable security deposit. First year\'s lease payment and security deposit were paid at beginning of the year.
e) At beginning of the year, company bought a patent at cost of $100,000 for revolutionary system to be used for dog grooming. Patent is expected to be useful for 10 years. Company paid 20% down in cash and signed four-year note at bank for remainder.
f) Operating expenses, comprising amortization of patent and rent on storage building, totaled $80,000 for first year. No expenses were accrued or unpaid at the end of year.
g) Company declared and paid a $20,000 cash dividend at the end of first year.
Create the income statement for first year