Income Statement, Statement of Cash Flows (direct Method), and Balance Sheet The following events occurred at Handsome Hounds Grooming Company during its first year of business: a. To establish the company, the two owners contributed a total of $50,000 in exchange for common stock. b. Grooming service revenue for the first year amounted to $150,000, of which $40,000 was on account. c. Customers owe $10,000 at the end of the year from services provided on account. d. At the beginning of the year, a storage building was rented. The company was required to sign a three year lease for $12,000 per year and make a $2,000 refundable security deposit. The first years lease payment and the security deposit were paid at the beginning of the year. e. At the beginning of the year, the company purchased a patent at a cost of $100,000 for a revolutionary system to be used for dog grooming. The patent is expected to be useful for ten years. The company paid 20% down in cash and signed a four-year note at the bank for the remainder. f. Operating expenses, including amortization of the patent and rent on the storage building, totaled $80,000 for the first year. No expenses were accrued or unpaid at the end of the year. g. The company declared and paid a $20,000 cash dividend at the end of the first year. 1. I have to prepare an income statement for the first year. 2. Prepare a statement of cash flows for the first year using the direct method in the Operating Activities section. 3. I have to know if the company generated more or less cash flow from operations than it earned in net income. What is the difference? 4. Prepare a balance sheet as of the end of the first year.