After graduating from Harvard University with the most valuable degree in Accounting, Michelle and Mary join together to form a new partnership named The Vintage Audio Company (VAC). They sell two items to a specialty market - 8 Track Tapes (8TT), and Cassette Tapes (CT). They use a LIFO system of inventory. The partnership operating agreement states that each partner will receive a monthly distribution of $1,000, then commissions for their own sales, then 12% APR return on their beginning equity, and then split the remaining profit 60% for Michelle /40% for Mary (in this order). The monthly distribution and commissions are taken during the month as a draw and the journal entries have already been made at the time of payment. During the month, VAC received a letter from the attorney of Jenny (one of their customers). The letter informed VAC that Jenny had declared bankruptcy and will not be paying the outstanding balance of her account ($300). Another month is finally over!! Time to "close the books". Your assignment in that process is to create the first two required financial statements for the previous month. To accomplish this assignment, you will use the provided information to calculate the following: 1. Create the Income Statement in the proper format, including net sales, COGS, gross profit, expenses and net income. 2. Create a Statement of Owners Equity 3. Provide an ending inventory schedule (schedule should include in good order, details by transaction) 4. Provide the Net Book Value for the equipment 5. Provide only the journal entries for the following: a. Income allocation between partners b. Record the monthly bad debt expense c. Record the monthly depreciation expense d. Recognize the bad debt write-off for Jenny Provided information:4. Fiovive le Nel BOOK value 101 wie equipIneIn 5. Provide only the journal entries for the following: a. Income allocation between partners b. Record the monthly bad debt expense c. Record the monthly depreciation expense d. Recognize the bad debt write-off for Jenny Provided information: Beginning Inventory Schedule (listed in the order they were purchased): Beginning Inventory 8TT Beginning Inventory CT Units Cost Amount Units Cost Amount 130 $5.00 $650.00 140 $7.00 $980.00 135 $5.20 $702.00 160 $7.50 $1,200.00 156 $5.50 $858.00 256 $8.00 $2.048.00 421 $2.210.00 556 $4,228.00 You estimate that VAC will write off 2% of their sales in bad debt. . Outbound freight to customers is calculated at $0.50 per unit sold. . Shipping supplies (boxes, tape, etc.) are calculated at $0.20 per unit sold. . Commission expense is 10% of net sales. For the previous month Michelle sold 60% of the product. Mary sold the rest. Office supplies were $500 for the month.. VAC is depreciating their packaging equipment on a straight-line basis. The equipment was purchased two years ago on Jan 1. It cost $46,000 and has a useful life of 7 years, with a salvage value estimated at $4,000. Inventory Purchases during the month: Apr 1 Purchased 50 8TT @ $5.00 each Paid inbound freight of $25 for Apr 1 purchase Apr 5 Purchased 50 CT @ $8.00 each Apr 8 Purchased 50 8TT @ $5.00 each Paid inbound freight of $25 for Apr 8 purchase Apr 10 Purchased 50 CT @ $8.00 each Apr 12 Purchased 50 CT @ $8.00 each Apr 13 Returned 40 CT found to be defective. Purchase price was $7.00 each Apr 17 Purchased 50 8TT @ $5.00 each Paid inbound freight of $25 for Apr 17 purchase Apr 20 Purchased 50 CT @ $8.00 each Apr 24 Purchased 100 8TT @ $5.00 each Paid freight bill of $50.00 for Apr 24 Apr 27 Purchased 75 CT @ $8.00 each Apr 28 Purchased 75 8TT @ $5.50 each Paid freight bill of $37.50 for Apr 28 purchases Apr 29 Purchased 150 CT @ $8.50 each Apr 30 Returned 20 CT found to be defective. Purchase price was $8 each Credit Sales during the month: Apr 3 Sold 65 8TT @ $10 each Apr 3 Sold 75 CT @ $13 each