Cascade Company was started on January 1, 2016, when it acquired $60,000 cash from the owners. During 2016, the company earned cash revenues of $35,000 and incurred cash expenses of $18,100. The company also paid cash distributions of $4,000.
Prepare a 2016 income statement, capital statement (statement of changes in equity), balance sheet, and statement of cash flows under each of the following assumptions.
a. Cascade is a sole proprietorship owned by Carl Cascade.
b. Cascade is a partnership with two partners, Carl Cascade and Beth Cascade. Carl Cascade invested $24,000 and Beth Cascade invested $36,000 of the $60,000 cash that was used to start the business. Beth was expected to assume the vast majority of the responsibility for operating the business. The partnership agreement called for Beth to receive 60 percent of the profits and Carl to get the remaining 40 percent. With regard to the $4,000 distribution, Beth withdrew $2,400 from the business and Carl withdrew $1,600.
c. Cascade is a corporation. It issued 5,000 shares of $5 par common stock for $60,000 cash to start the business.