Vernon Company began operations on January 1, year 1, by issuing common stock for $40,000 cash. During year 1, Vernon received $55,700 cash from revenue and incurred costs that required $38,700 of cash payments.

Required Prepare a GAAP-based income statement and balance sheet for Vernon Company for year 1 under the following scenario:

Vernon is a promoter of rock concerts. The $38,700 was paid to provide a rock concert that produced the revenue.