Every year, Robin identifies a small business to invest her money in because she wants to support companies that WSU studentshave started. Robin named the program WSU Small Business Booster. Robin is a graduateof the Carson College of Business and is now a successful venture capitalist in Silicon Valley. Different from her venture capital role of investing in high technology start-ups that require significant funding, herfocus on WSU students is to provide a littlefinancial support and some advice so students can learn about accounting and business from running their own small businesses.Each yearin JulyWSU students interested in the WSU Small Business Booster program submit a short description of their small business along with an income statement and balance sheet for their business over the last12 months. Robin finds the financial statements valuable in making her decision on which business to support. She compares the financial statements to get an understanding of each business and also calculates and compares financial ratios.Robin has already reviewed the 15 submissionsfor July2021 and has narrowed her decision to two business proposals: Catherines Canine Cookies and Bills Snack Truck. Below are descriptions of thesetwo finalists. The information presented below is for the 12 months ending June30, 2021. Create an income statement and balance sheetfor eachcompany.Catherines Canine CookiesCatherine Yang started baking fun,and healthy,dog treatsat the end of lastsummer and sells them to friends, family, and at the Moscow Farmers Market. Last July, Catherine had $50 of her own money she couldput into her business,but it wasnt enough. She borrowed $150 from her dad so she could buy the raw ingredients that went into making her cookies. Catherine also purchased two bowls, two baking sheets, and a mixer. The bowls cost $5 each, the baking sheets cost $6 each, and the mixer cost $20. She expected to use the bowls and baking sheets for two years and the mixer for five years. Throughout the year, Catherine purchased raw ingredients three times. The first time was to make cookies for the farmers market in the Fall, the second time was to make cookies for the farmers market in the Spring, and the third time was to make cookies for the farmers market the following Fall. Her receipts were as follows: Safeway for $23.45, Walmart for $18.75, and Safeway for $35.76. With all of these ingredients throughout the year, she was able to produce 130 cookies. She did enlist the help of two friends to help her make the cookies. Steve worked five hours throughout the year,and Asha worked 10hours. She paid them $9an hour. By June 30, 2021, she had already paid Steve,but Asha worked five hours on June 30, 2021in preparation for the farmers market in Fall 2021. So Catherine has not paid Asha for that time yet.

She did pretty well selling the cookies, especially at the Moscow Farmers market. Throughout the year, Catherine sold 112 cookies for an average price of $3.56each.Two customers returnedone cookie eachbecause they didnt realize they were for dogs. And one of her best friends didnt have anycash on her and promised she would pay Catherine back for the three cookies she bought. Catherine has yet to see that money,but she plans on following up with her friend. Catherine had wanted to pay her dad back but decided she had better keep some cash to make the next batch of cookies. So she only paid her dad $25 of the money she owed him.Overall, Catherine felt pretty good about her first year of business, especially since sheonly made three batches of cookies throughout the year. Withfinancial supportthrough the WSU Small Business Booster program, she could bake and sell many more batches of cookies next year.Bills Snack TruckBill Goldmannstarted a business idea he had about two years ago when he began college at WSU.He knew college students walked all over campus,so he decided to use his pickup truck to sell drinks and snacks to students in the late afternoons and nights. Bill purchased drinks and snacks in bulk at Costco and then sold them at a premium from his truck. His parents had already given him a truck for college,so he just needed some cash to buy inventory. His brother thought Bill had a great idea,so he invested $50 into Bills business. Bills brother didnt need to be paid back but wanted to own a portion of Bills business (and,therefore, earn a portion of Bills profits). Bill also needed to pitch in $50 to cover initial expenses.Two years ago,on July 1, 2019, Bill purchasedsome items to display food and drinks in the back of his pickup truck. He purchased shelves for $33 from Pullman Building Supply. He also thought he could attract customers by having some lights on his truck,so he bought some stringed lights from Walmart for $15. At that time, he guessed that he could use both the shelves and lights fora total ofthree years.On July 1, 2020, Bill had some inventory leftover from his previous purchase. He had $15 worth of sodas and $10worth of cookies and chips. Throughout the last year, Bill had spent an additional $133 ondrinks and snacksat Costco.One of hisfriends was moving back home and had an extra 12 sodas in his refrigerator and gave them to Bill to sell. Bill told his friend hed pay him $4 for the sodas,but he still owes it to him. Bill also spent $33.54 on gas throughout the year.Bill had a prettygood system of recording his purchases and sales in a spreadsheet. Bill sold 75 cans of soda throughout the yearat an average price of $2per can and 64 bags of chips or cookies for an average price of $2.50 per bag. There was a heatwave at the end of June, and three of Bills friends were very thirsty but didnt have any money but promised to pay him back if he gave them each a soda.Bill gave them a total of three sodas and got an IOU from each of his friends. At the end of the year,on June 30, 2021, Bill had 15 cans of soda that cost an average of $0.23per can and ten bags of chips that cost an average of $0.15 per bag.Bill was having a good time with his snack truck business. Hismain challenge was that he had limited timebecause he had to study and couldnt drive the snack truck around as often as hed like. If he receivesfunding from the WSU Small Business Booster program, he could hire a couple of people to drive the snack truck, increasingsales significantly.Robin thought about the two businesses and tried to decide which company was stronger financially.

INSTRUCTIONSHelp Robin analyze thefinancial performance of thesetwo businesses by completing the following:

1.Create income statements and balance sheets for Catherines Canine Cookies and Bills Snack Truck for the year ending June 30, 2021. What are some strengths of Catherines business over Bills and vice versa?HINT: For Bills Snack Truck, Bill purchased the shelves and lights two years ago on July 1, 2019. The balance sheet you are creating is for the 12 months ending June 30, 2021. So when calculating accumulated depreciation on the balance sheet, you need to consider that he has used two years worth of these fixed assets.

2.Calculate financial ratios for Catherines Canine Cookies and Bills Snack Truck using the spreadsheet provided and consider which business you would invest in and why.(Show ratios in the format shown in Exhibit 15.6. For example, Return on Sales and Return on Equity should be percentages, Earnings per Share should be in dollars, and the other ratios shouldbe decimals, and all values should berounded to 2decimal places).