Sofia and Luisa Ruiz are sisters and have had a lifelong dream to open a bed and breakfast together named Dos Hermanas. They invested $200,000 of their own money, and the company issued common stock to them. The business then got a $200,000 bank loan for the total of $400,000 needed to get started. The company bought a Spanish mission style home in Santa Fe for $160,000. It was in need of renovations which cost another $100,000. They found most of the furniture at antique shops and flea markets for a total cost of $40,000. Kitchen equipment cost $20,000, and a computer system cost $4,000. Prior to the grand opening, the banker requests a report on their activities thus far. The bank statement of Dos Hermanas shows a cash balance of $76,000. Sofia and Luisa believe that the $76,000 represents net income for the period, and they feel pretty good about the results of their business. To better understand how well they are doing, they prepare the following income statement for presentation to the bank: DOS HERMANAS BED AND BREAKFAST Income Statement Six Months Ended June 30, 20XX $ 200,000 200,000 $ 400,000 Revenues: Common stock Bank loan Total revenues Expenses: Cost of the house Renovation to the house Furniture expense Kitchen equipment expense Computer expense Total expenses Net Income 160,000 100,000 40,000 20,000 4,000 324,000 $ 76,000