To support herself while attending school, Taylor sold refurbished cell phones.

During the first year of operations, Taylor purchased the cell phones for $280,000 and sold them for $390,000 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 2 percent of sales.

During the year, she paid $4,220 cash to replace a defective tuner.

Required a. Prepare an income statement for Taylors first year of operation.