Exercise 4-1A Comparing a merchandising company with a service company LO 4-1 The following information is available for two different types of businesses for the Year 1 accounting year. Hopkins CPAs is a service business that provides accounting services to small businesses. Sports Clothing is a merchandising business that sells sports clothing to college students. Data for Hopkins CPAS 1. Borrowed $42,000 from the bank to start the business. 2. Provided $32,000 of services to clients and collected $32,000 cash. 3. Paid salary expense of $20,500. Data for Sports Clothing 1. Borrowed $42,000 from the bank to start the business. 2. Purchased $21,000 inventory for cash. 3. Inventory costing $17,600 was sold for $32,000 cash. 4. Paid $2,600 cash for operating expenses. Required a. Prepare an income statement, balance sheet, and statement of cash flows for each of the companies. (Statement of Cash Flows only, items to be deducted must be indicated with a negative amount.) HOPKINS CPAs Income Statement For the Year Ended December 31, Year 1 Revenue Expenses HOPKINS CPAs Balance Sheet As of December 31, Year 1 Assets Total assets Liabilities Total liabilities Stockholders' equity Total stockholders' equity Total liabilities and stockholders' equity HOPKINS CPAs Statement of Cash Flows For the Year Ended December 31, Year 1 Cash flows from operating activities: Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities: Net cash flow from financing activities Ending cash balance SPORTS CLOTHING Income Statement For the Year Ended December 31. Year 1 Expenses $ 0 SPORTS CLOTHING Balance Sheet As of December 31, Year 1 Assets Total assets Liabilities Total liabilities Stockholders' Equity Total stockholders' equity Total liabilities and stockholders' equity SPORTS CLOTHING Statement of Cash Flows For the Year Ended December 31, Year 1 Cash flows from operating activities: Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities: Net cash flow from financing activities Ending cash balance $ 0