Today is August $1.$ You have been using a receipt book and a business checkbook to keep track of your daily transactions. You will now use these to help you produce a single$-$entry bookkeeping record using two ledgers that are provided. You will also produce an income statement using the form provided.Income Ledger:An income ledger is provided in the "Ledger wb$"$ file that is attached to the assignment below. There are columns for taxable sales, sales tax, non$-$taxable sales, and total daily sales. All products sold are taxable; all labor charges are non$-$taxable. This information comes from you sale receipts.There are also columns for Loans and Owners Draw. This information comes from your checkbook.Expenditure Ledger:An expenditure ledger is provided in the "Ledger wb$"$ file that is attached to the assignment below.All checks written and cash transactions must show up on the expenditure ledger.There are columns for Rent, Insurance, Utilities, Licenses, Inventory, Advertising$($Sign$),$ Depreciable Assets $($the air compressor you bought$)$ and Nondeductible Expenses $($Loan Payments and Owners Draw$).$Depreciable assets include items such as furniture, tools, equipment, machinery, and buildings. These items must be depreciated over their useful life and may not be deducted entirely in one accounting period.Nondeductible expenses include items that are not deductible at all, such as owners draw, the principal amount of loan payments, and non$-$business expenses.The interest portion of loan payments should show up in an interest column.Information will come from your checkbook.Income Statement:A income statement form is provided in the "income statement wb$"$ file that is attached to the assignment below.Cost of goods sold is calculated using this formula:COGS $=$ Beginning inventory $+$ Purchases $-$ Ending inventorySales tax is not shown on the income statement.Depreciation expense for the period $($but not the entire equipment purchase$)$ is shown.Interest expense $($but not the entire loan payment$)$ is shown.Information will come from your ledgers.Download the "ledger wb$"$ and "income statement wb$"$ files attached to this assignment by clicking on the titles then follow the directions below.Income Ledger: Used to record income and daily sales.Transfer the daily sales totals from the receipt book to the income ledger.Make sure you pay attention to the dates.Use the income ledger to keep track of any loans and owner investments deposited during the month.Expenditure Ledger: Used to record all expenditures including business expenses, business loan payments, and owner's draw.Transfer all check amounts to the expenditure ledger.For the loan payments, you will divide them between interest expense $($$$7\mathrm{.}44)$ and Loan Payment $($Principle amount $$55\mathrm{.}56).$Pay attention to the dates.Income $($Profit and Loss$)$ Statement: An income statement is a schedule showing a business' income and expenses for a period of time and the difference between the two.Determine income for the period. This is the period total from the income ledger $($Total Daily Sales Sum$).$ Do not include sales tax, loan income, or owner's investment.Determine Cost of Goods Sold during the period.a$.$ Start with beginning inventory $($in this case $$0\mathrm{.}00).$b$.$ Add the cost of all inventory purchases.c$.$ Subtract the cost of ending inventory $($what you have left at the end of the month$).$d$.$ The remainder is the cost of the goods you sold over the period.Subtract cost of goods sold from income. This figure is your gross profit.List the column totals from the expenditure ledger $($except sales tax and non$-$deductible expenses$)$ under expenses on the income statement. Sales tax does not appear on the income statement.Depreciable assets such as furniture, tools, equipment, machinery, buildings, etc. must be depreciated over a period of years. For this simulation, calculate depreciation based on the straight$-$line method, which depreciates $($or writes off$)$ equipment evenly over the useful life of the equipment or fixtures. Assume the useful life of fixtures and equipment is five years. $($$$2,400\mathrm{.}00$ of equipment your started out with plus the $$350\mathrm{.}00$ air compressor you bought $=$ $$2,750\mathrm{.}00/5$ years $=$ $$550\mathrm{.}00$ of Depreciation$).$ List depreciation after the other expenses on the income statement.Non$-$deductible expenses such as owner's draw, the principal portion of the loan repayment, and non$-$business expenses do not appear on the income statement.Subtract the expenses $($including depreciation$)$ from the gross profit. This figure is your net profit $($or net loss$).$