Stan is the owner of a sole proprietorship that he just opened. For his first month in business, he had the following transactions:

• He purchased $50,000 of equipment, putting 20% down and borrowing the remainder.
• He was able to sell 1,000 units of product at an average price of $45 each. Half of the sales were on credit, none of which had been paid as of the end of the month.
• Cost of goods sold came to $21,000 and are related to the above sales.
• $39,000 worth of inventory was purchased in cash.
• All other expenses (including the interest from the loan) of $5,000, were paid in cash.
• Buster's personal tax rate is 40%. (You remembered that in sole proprietorships, income is paid at the individuals level). Taxes will be paid in a subsequent period.)

1. Write out an Income Statement and fill in the two blanks below. For your answers do not include $ on your answers.
   1. The Gross Margin amount is
   2. The Net Income amount is :

2. What are the flows of cash in and out of the business during the month. Show inflows as positives and outflows as negatives (using sign "-"). Sum these values to arrive at a "Net Cash Flow" figure. Do not write the $ sign for your answers.

Cash Flows

Purchase of Equipment: $

Proceeds from the Loan (hint: 20% was paid in cash) $

Cash from Sales:$

Purchase of Inventory:$

Other Expenses: $

Net Cash Flow (cash available to the company): $: