The following worksheet is called a Balance Sheet Equation Worksheet. The worksheet lists the key events in the life of UWP over years 1 through 3: each of these events is likely to affect the financial statements of UWP. The impact of the events on the UWP Balance Sheet for years 1 and 2 has been sketched out. 

    a. Using the completed transactions from years 1 and 2 as a guide, fill in the worksheet for year 3.

 

					ASSETS				=	LIABILITIES & OWNERS' EQUITY
					Cash	Filters	Vehicles	Prepaid Costs		Debt	Paid-in Capital	Retained Earnings
YEAR 1
Beginning-of-year activities
	1	Founders' Investment, HBS Prize Money			$25,000						$25,000
	2	Alumnus Investment			$200,000						$200,000
	3	Blue Future Contract Charge			($40,000)			$40,000
	4	Slowsand Filters			($20,000)	$20,000
	5	Motorcycles and Trucks			($20,000)		$20,000
	6	Prepaid Marketing, Brand Ambassador			($100,000)			$100,000
Through-the-year activities
	7	Revenues			$219,000							$219,000
			Revenue Underreporting		($32,850)							($32,850)
			Cost of Revenue, Vendor Compensation		($37,230)							($37,230)
	8	Technicians' Wages			($3,600)							($3,600)
	9	Local Management Salaries			($120,000)							($120,000)
	10	Sales Staff Salaries
	11	Water Testing & Filter Maintenance			($10,200)							($10,200)
	12	Marketing Expenses			($10,000)			($50,000)				($60,000)
	13	Vehicle Expenses			($2,500)							($2,500)
	14	Other Costs			($29,784)							($29,784)
Year-closing activities
	15	Depreciation
			Blue Future Contract					($2,667)				($2,667)
			Slowsand Filters			($1,333)						($1,333)
			Motorcycles and Trucks				($4,000)					($4,000)
YEAR 1 CLOSING TOTALS					$17,836	$18,667	$16,000	$87,333		$0	$225,000	($85,164)
					ASSETS				=	LIABILITIES & OWNERS' EQUITY
					Cash	Filters	Vehicles	Prepaid Costs		Debt	Paid-in Capital	Retained Earnings
YEAR 2
Opening Balances					$17,836	$18,667	$16,000	$87,333		$0	$225,000	($85,164)
Beginning-of-year activities
	1	Debt			$1,000,000					$1,000,000
	2	Slowsand Filters			($487,500)	$487,500
	3	Motorcycles and Trucks			($492,500)		$492,500
Through-the-year activities
	7	Revenues			$8,760,000							$8,760,000
			Revenue Underreporting		($1,314,000)							($1,314,000)
			Cost of Revenue, Vendor Compensation		($1,489,200)							($1,489,200)
	8	Technicians' Wages			($120,000)							($120,000)
	9	Local Management Salaries			($325,000)							($325,000)
	10	Sales Staff Salaries			($36,000)							($36,000)
	11	Water Testing & Filter Maintenance			($408,000)							($408,000)
	12	Marketing Expenses			($25,000)			($50,000)				($75,000)
	13	Vehicle Expenses			($65,000)							($65,000)
	14	Other Costs			($1,191,360)							($1,191,360)
Year-closing activities
	15	Depreciation
			Blue Future Contract					($2,667)				($2,667)
			Slowsand Filters			($33,833)						($33,833)
			Motorcycles and Trucks				($102,500)					($102,500)
	16	Repay Debt			($1,000,000)					($1,000,000)
	17	Interest Charge			($100,000)							($100,000)
YEAR 2 CLOSING TOTALS					$2,724,276	$472,334	$406,000	$34,666		$0	$225,000	$3,412,276
					ASSETS				=	LIABILITIES & OWNERS' EQUITY
					Cash	Filters	Vehicles	Prepaid Costs		Debt	Paid-in Capital	Retained Earnings
YEAR 3
Opening Balances					$2,724,276	$472,334	$406,000	$34,666		$0	$225,000	$3,412,276
Beginning-of-year activities
	1	Slowsand Filters			($250,000)	$250,000
	2	Motorcycles and Trucks			($237,500)		$237,500
Through-the-year activities
	7	Revenues			$13,140,000
			Revenue Underreporting		($1,971,000)
			Cost of Revenue, Vendor Compensation		($2,233,800)
	8	Technicians' Wages			($180,000)
	9	Local Management Salaries			($400,000)
	10	Sales Staff Salaries			($18,000)
	11	Water Testing & Filter Maintenance			($612,000)
	12	Marketing Expenses			($129,352)
	13	Vehicle Expenses			($110,000)
	14	Other Costs			($2,632,000)
Year-closing activities
	15	Depreciation
			Blue Future Contract					($2,667)				($2,667)
			Slowsand Filters			($50,500)
			Motorcycles and Trucks				($150,000)
YEAR 3 CLOSING TOTALS					$7,090,624	$671,834	$493,500	$31,999		$0	$225,000	$3,409,609

Unit Sales and Projected Costs Per Iwasaki's observations, water vendors averaged 150 to 350 customers per day. The physicians on the team concluded that each customer needed a minimum of one liter of clean water per day for his or her household. The team planned to have 50 filters operating by the end of its first year of operations, an additional 1,950 filters at the end of year two, and a further 1,000 filters by the end of the third year. Each vendor would have one filter, so the network of vendors was expected to eventually grow to 3,000. After much market research, the company decided to introduce its product, purified water, at a price of US$0.08 per liter. At this price, once all 3,000 slowsand filters were