In January, $2020$ Karl the entrepreneur decided to start a taxi business. He bought a $3$ year old car for $$10,000,$ bought some ads with his phone number in the annual Yellow Pages book for $$1,000,$ and some flyers for $$100.$ He also spent $$100$ for an attachment to allow his phone to process credit cards, and $$75$ for a business license.

In the first $\frac{21}{2}$ months $($prior to when COVID hit in mid$-$March$)$ he collected $$8,000$ in fares and tips, and paid $$500$ for gas and $$30$ for an oil change. He is insured under his personal auto policy $($he doesn't plan to mention the customer if an accident happens while on a fare$).$ He washes his car at home, and to protect it from some old enemies, he stores it for free in an empty $2$ car garage his uncle could rent out for $$\frac{100}{?}$ month per spot $-$ his uncle wants to support his new business.

After COVID hit, he switched to delivering food for restaurants, for which he gets a $$5-10$ fee per delivery. His revenue from this has been $$4,000$ in fees from restaurants, plus $$1,500$ in tips. Gas has cost $$300.$ He's spent about $$2,500$ on meals while working. In the last week of April he had to get new tires when a couple blew out after driving near a construction site, so he called an old friend who asked for $$200$ up front, plus $$100$ a month for the next $4$ months.

Karl is thinking about expanding and want to know what his income and financial position is$,$ but hasn't taken an accounting course. He knows you're taking the class now and are pretty smart, so has asked you to advise him.

If you have further questions about Kwik Kar, ask in class, or post them on the Discussion Board and email me $($the professor$)$ to let me know your question is there.

Required: Analyze the case and submit one document addressing the four requirements below. Further details may be posted on the Canvas Discussion Board in response to questions, so check there.

Watch the video about Financial Accounting Cases $-$ Objectives $(13$ mins$)$ and think about the objectives that apply in this case. Write a few paragraphs explaining what you think the objectives are and why, which you selected as his primary objective, and whether this will lead to a desire to increase or decrease reported income. $(4$ pts$)$

Do the journal entries, and after each entry, write a sentence or two explaining any decisions or estimates you made and how these were influenced by your client's objective$($s$).$ How would the entry change if you changed his objective? $(25$ pts$)$

Post the entries to a ledger, put the ledger totals in a Trial Balance, and generate a set of financial statements $($Income Statement and Balance Sheet only$)$ in proper format. You only need to submit the Income Statement and Balance Sheet$).(20$ pts$)$