Ho Designs experienced the following events during Year 1, its first year of operation:

1. Started the business when it acquired $66,000 cash from the issue of common stock.

2. Paid $21,300 cash to purchase inventory. Sold inventory costing $11,700 for $26,800 cash.

3. Physically counted inventory; had inventory of $7,700 on hand at the end of the accounting period.

Required

a. Record the events in the T-accounts provided.

b. Prepare an income statement and balance sheet.

Cash Common Stock Beg. Bal. Beg. Bal. End. Bal. End. Bal. Inventory Sales Revenue Beg. Bal. Beg. Bal. Bal End. Bal. End. Bal. Cost of Goods Sold Beg. Bal. End, Bal. HO DESIGNS Income Statement For the Year Ended December 31, Year 1 HO DESIGNS Balance Sheet As of December 31, Year 1 Assets Total assets Liabilities Stockholders' equity Total stockholders' equity Total liability and stockholders' equity