To support herself while attending school, Daun Deloch sold stereo systems to other students. During the first year of operations, Deloch purchased the stereo systems for $143,000 and sold them for $268,000 cash. She provided her customers with a one-year warranty against defects in parts and labor. Based on industry standards, she estimated that warranty claims would amount to 4 percent of sales. During the year, she paid $2,230 cash to replace a defective tuner.

Required

1. a-1. Prepare an income statement for Delochs first year of operation.
2. a-2. Prepare a statement of cash flows for Delochs first year of operation.