Upon graduation from college, Bill Johnson and two friends formed the corporation, BFF, Inc., in the State of North Carolina. The purpose of the corporation was to market and sell Battle Front, a game the friends had developed in college. The three friends also intended to develop and sell additional games and apps. They began the corporation by investing $15,000 each in the business. First, they transferred the $45,000 in investment funds to the business bank account. The company then purchased used office furniture for $12,000 cash and computer equipment for $21,500 cash; rented space in a small building; advertised in nationally distributed gaming magazines; and began business operations on July 1, 2014. Business was so good that BFF, Inc. eventually had to hire three additional programmers and an accountant.

The three friends were keenly aware of the need for timely reports about the business's financial position and results of operations. At the end of September 2014, the company accountant was asked to prepare an income statement for the first quarter of operations. The company accountant gathered the following data for the three months just ended. Bank account deposits for game sales totaled $352,000 and app sales $26,000. The following checks had been written: programmer's wages and accountant wages, $97,500; payroll taxes, $7,500; legal fee, $20,000; internet access cost, $3,000; insurance, $1,700; rent, $4,000; cell phone charges, $1,825; advertising expenses, $36,000; Utilities (electrical, janitorial etc.), $5,700; dividend to the three stockholders', $30,000; and additional computer equipment, $9,000. Also, uncollected bills to customers for Game sales amounted to $35,500. The $2,000 rent for September and $1,000 in utilities for September had not been paid. Estimated depreciation on office equipment and computer equipment totaled $2,300 for the three months. Estimated income taxes for the three-month period were $46,000.

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Required:

1. Prepare a quarterly income statement for BFF, Inc. for the three months July through September 2014. Use the following main captions: Revenues, Expenses, Pretax Income, and Net Income.

2. How much Cash did BFF, Inc. have in the company bank account at September 30, 2014.

3. List at least one asset other than cash and one liability that should be on the BFF, Inc. September 30, 2014 balance sheet.

4. Do you think that BFF, Inc. may need one or more additional financial reports for 2014 and thereafter? Explain.