On March 1, Carl Caldwell started Caldwell Furniture Repair Company. He invested $2,000 of his own money, borrowed $16,000 from his father-in-law at 9% annual interest, and obtained an additional $3,000, 12% loan from Maxibank. He purchased $15,000 of tools and equipment (some new, some used) and bought $5,200 of supplies such as paints, resins, and glue, all for cash. He rented a shop at a local business park by paying $3,600 in advance for the months of March, April, and May. During March he performed repairs totaling $7,600 and used up $2,400 of supplies. Of the repair services performed, 75% were paid for in cash by the end of the month and the balance was expected to be collected in April. Carl estimated that wear and tear on the equipment and tools during March was $250. On March 31, he owed $332 to the electric company and $78 to the water company for services consumed. Also on that date, he paid interest totaling $150 on the two loans.

Required

A. Prepare an income statement for Caldwell Furniture Repair for the month of March.

B. Prepare a separate schedule that explains the changes in cash balance during March.

C. Is the transformation cycle complete or incomplete at the end of March? Explain your answer.