Accounting Project (This project can be completed with material provided in Chapters 1 and 2) Your Great Aunt Mildred has been knitting for as long as you can remember. She's created scarves, blankets, hats, and even winter socks. She's currently thinking about turning her hobby into a full blown business, but she knows nothing about where or how to get started. She isn't even sure if anyone would be interested in her knitted goods. She has contacted you to help her make sense of everything, because she knows you are a dedicated Accounting student. Please help your Great Aunt Mildred answer her questions. Please complete parts 1-4 in a Word document and part 5 in an Excel document. For further project guidelines and requirements (including proper grammar and spelling-5 points), refer to the project grading rubric. - I'd like to submit the paperwork for my new business, but l'm not sure what type of business I should form. Can you please explain at least two advantages and two disadvantages of a sole proprietorship, partnership, and corporation for me? Also, which type of business do you suggest I form and why? ( 9 points) - When I called the bank, they kept using these terms like operating, investing and financing, but really didn't have time to explain them to me. Can you please define each of these terms and give an example of how each one would apply to my knitting business? ( 9 points) - I'm not sure l'm cut out for the business world! Apparently there's some equation that I'm supposed to learn in Accounting, but I just can't keep the elements straight, and honestly I still don't know the differences between them anyway! Can you explain to me all three main elements of the accounting equation and at least two types of accounts that would fall into each element? (15 points) - The bank says that the only way I can receive a loan is to present financial statements to them, but l've never created anything more than a bank deposit slip before! Can you explain each of the four financial statements to me (in proper order) and tell me how they are all interrelated? Can you also explain the differences between current and long-term and how those concepts relate to the elements in the financial statements? (15 points) - In order to prepare for the presentation of financial statements for the bank, I knitted a bunch of items and sold them at the local flea market the last few weekends. It was so great to see everyone out there shopping around. I didn't think so many people were interested in knitted key chains! I kept track of all the cash I spent and all the cash I collected and I was hoping you could create the financial statements for me. I apologize the information isn't organized very well...l'm just not sure what you're looking for. Using the information below, complete the Income Statement, Statement of Retained Earnings, and Balance Sheet for your Aunt Mildred. Be sure to include proper headers, dates, and account titles (reference page 1-29 in your textbook for proper formatting). Lastly, in the column next to each of Aunt Mildred's accounts below, list out what type of business activity (operating, investing, financing, or N/A) the account would fall into on the Statement of Cash Flows, if any. (chart -12 points, statements-35 points) Other Important Information: - I started my business on June 2nd by investing my own cash. - I paid cash for this great piece of furniture (reclining chair) to use while I knit! - All of my expenses were paid in cash and all the money I received from my customers was in cash. - Hints and reminders from Accounting Instructor: 1. There is no dividends for Aunt Mildred's knitting business...yet! 2. Although Aunt Mildred does not know what type of business she is going to choose. Just assume her business is a corporation when you work on the financial statements. To match what you learned in Chapters 1 and 2, treat the $1000 Owner's Capital as Common Stock. 3. Financial Statements will only contain elements from the Chart of Accounts. Thanks so much for helping me with all of this! I promise to write a nice letter to your accounting instructor about how much help you've been to me. Maybe you can be my accountant when you graduate. Good luck with the rest of your class. I've knitted you a pencil case for helping me out