my question is attached , can u give me the correct solution. thank you .

Comprehensive Problem 4 Corporations This problem has a value of 10% of the final grade. You are an accountant and have two clients you'll be dealing with during this assignment. JumpinJehosaPhats is a haberdashery (Google it!), and is owned by J.J. Phats. JJ is expanding the company and is in need of advice. He has come to you to discuss the future of the company. Part 1 - Incorporating (25% of grade) Discuss in detail the requirements of incorporating the business, the advantages and disadvantages, and provide JJ with recommendations. Part 2 - Account Prep (25% of grade) Using the data provided, create the owner's equity accounts and the shareholder's equity section of the balance sheet after the incorporation of JumpinJehosaPhats. Part 3 - Expansion Considerations (25% of grade) JJ is in need of raising money to expand the company and has identified the methods that he is considering. Using the information provided, calculate any burden to the corporation and provide recommendations to JJ concerning his options. Part 4 - Cash Flow (25% of grade) Your second client, Bailey's Chocolates, is asking you to produce a Cash flow from Operating Activities. Using the Indirect Method and the information provided, calculate the cash flow from Operating Activities. Be sure to cite your resources and include supporting calculations and evidence to support your positions. Page 1 JumpinJehosaPhats: Part 2 Information JumpinJehosaPhats is a small business owned by JJ Phats as the sole proprietor. JJphats is incorporating the business. On January 1, 2012 JumpinJehosaPhats Inc. has been authorized to issue 1,000,000 common shares with a Par Value of $1. In the process of incorporating, the sole proprietor owner's equity accounts must be closed and the equity must now reflect a corporate stockholders' equity account. The books for the Sole Proprietorship indicate the following: JJ Phats deposited $35,000 to start JumpinJehosaPhats JJ Phats contributed $50,000 of equipment to start JumpinJehosaPhats Retained Earnings December 31, 2011 = $150,000 Prepare the Stockholder's Equity Portion of the Balance Sheet on January 1, 2012. JumpinJehosaPhats: Part 3 Information JumpinJehosaPhats was incorporated on January 1, 2012 and a year later it needs $10,000,000 to expand operations. JJ Phats is the sole shareholder of the corporation. The corporation is considering three methods to raise the capital: issuing common shares at FMV issuing preferred stock with par = $1000 issuing 10 year bonds with par = $1000 You have been hired to determine the best way for the company to obtain the funds needed which might be a single method or combination of methods. Using the following information, discuss the pros and cons of each method and provide necessary calculations to support the position you recommend. The company is authorized to issue 1,000,000 shares with a par value of $1.00 On January 1, 2013 an appraisal of the company indicates that it has a current value of $25,000,000. On January 1, 2013 current interest rates are 3.5% APR and rising. On December 1, 2012 the competition (LeapinLizards Inc) issued 10,000 ten year cumulative preferred shares with par = $1000 at 3.4% Comprehensive Problem 4: Part 4 Bailey's Chocolates has provided statements of retained earnings, income statements, and balance sheets for the months of January and February 2012. The company wants you to calculate the cash flow from operating activities for the period ending February 2012 using the indirect method. Using the Indirect Method produce a Cash Flow from Operating Activities. Cash Flows from Operating Activities (Indirect Method) Net Cash Flow from Operating Activities Bailey's Chocolates Bailey's Chocolates Income Statement Month Ending January 31, 2012 Income Statement Month Ending February 29, 2012 Revenue $ 20,000 Cost of Good Sold (5,000) Gross Margin $ 15,000 Expenses Salary Expense 900 Supplies Expense 20 Office Equipment Expense 200 Rent Expense 1,000 Insurance Expense 100 Interest Expense-Note 100 Interest Expense-Mortgage 1,000 Depreciation Expense-Building 1,500 Depreciation Expense-Equipment 250 Total Expenses $ 5,070 Net Income $ 9,930 Revenue $ 23,000 Cost of Good Sold (7,000) Gross Margin $ 16,000 Expenses Salary Expense 1,000 Supplies Expense 30 Office Equipment Expense 225 Rent Expense 1,000 Insurance Expense 100 Interest Expense-Note 100 Interest Expense-Mortgage 1,000 Depreciation Expense-Building 1,500 Depreciation Expense-Equipment 250 Total Expenses $ 5,205 Net Income $ 10,795 Bailey's Chocolates Retained earnings, January 1, 2012 Net Gain, January 31, 2012 Liabilities Current Assets Cash $ 85,260 Accounts receivable 10,600 Inventory 3,220 Supplies 150 Prepaid Office Equipm 150 Prepaid Rent 1,500 Security Deposit 1,500 Prepaid Insurance 400 $ 102,780 Total Current Assets Property, Plant & Equipment 498,500 Total PP & E 8,750 $ 507,250 Total Assets $ 610,030 Current Liabilities Accounts Payable Assets Retained earnings, February 1, 2012 Net Gain, February 1, 2012 $ Salary Payable Total Current Liab $ 3,500 200 3,700 Long-Term Liabilities Notes Payable Int Pay-Note Mortgage Payable Int Pay-Mort Total LT Liabilities $ 48,000 400 480,000 2,000 $ 530,400 Total Liabilities $ 534,100 Shareholder's Equity Common Stock $ 6,000 APIC-Common 60,000 Retained Earnings 9,930 $ 75,930 Total Equity Total Liab & Equity $ 610,030 Cash $ 90,000 Accounts receivable 10,875 Inventory 2,750 Supplies 120 Prepaid Office Equipm 100 Prepaid Rent 500 Security Deposit 1,500 Prepaid Insurance 300 $ 106,145 Total Current Assets Property, Plant & Equipment Building 500,000 Acc Dep-Bu (3,000) Equipment 9,000 Acc Dep-Eq (500) Less Withdrawals (Dividends) Increase in Retained Earnings Retained earnings, February 29, 2012 497,000 Total PP & E 8,500 $ 505,500 Total Assets $ 611,645 Current Liabilities Accounts Payable $ Salary Payable Total Current Liab $ 3,200 150 3,350 Long-Term Liabilities Notes Payable Int Pay-Note Mortgage Payable Int Pay-Mort Total LT Liabilities 48,000 500 480,000 3,000 $ 531,500 Total Liabilities $ 534,850 $ Shareholder's Equity Common Stock $ 6,000 APIC-Common 60,000 Retained Earnings 10,795 $ 76,795 Total Equity Total Liab & Equity $ 9,930 $ 9,930 Bailey's Chocolates Liabilities Current Assets - Statement of Retained Earnings Month Ending February 29, 2012 Balance Sheet Month Ending February 29, 2012 Assets $ $ 9,930 Less Withdrawals Increase in Retained Earnings Retained earnings, January 31, 2012 Bailey's Chocolates Balance Sheet Month Ending January 31, 2012 Building 500,000 Acc Dep-Bu (1,500) Equipment 9,000 Acc Dep-Eq (250) Bailey's Chocolates Statement of Retained Earnings Month Ending January 31, 2012 $ 611,645 $ 9,930 $ 10,795 $ 20,725 $ (9,930) $ 10,795 $ 10,795