Johnsn and Hill formed a company, and 2018 was theirfirst year of operation.

1. To establish Johnson & Hill each contributed a total of$60,000 in exchange for common stock.
2. Johnson & Hill specializes in high-end parties. The firstyear they conducted 94 events and revenue for the first yearamounted to $480,000, of which 95% was to be paid by the date ofthe event and the remainder due within 30 days of the event.
3. Clients owe $16,000 at the end of the year from the servicesprovided in December.
4. At the beginning of the year, a storage building was rented,signing a two-year lease for $15,000 per year and making a $4,000refundable security deposit. The first year’s lease payment and thesecurity deposit were paid at the beginning of the year.
5. At the beginning of the year, the company purchased acomputerized stage and lighting for $120,000 expected to be usefulfor twelve years. The company paid 20% down in cash and signed afour-year note at the bank for the remainder (with 10%interest-only to be paid annually until maturity). They alsopurchased a trailer to haul it with, for $8,000, also with anexpected 15-year life. Johnson & Hill must lease a large truckto haul the trailer for each event, which costs $1,000 perday.
6. Other operating expenses, including wages, deprecation on otherequipment, utilities, and rent on the storage building noted in (d)and (e) above, totaled $136,000 for the first year. Only $5000 wasaccrued accounts payable at the end of the year.
7. Johnsn & Hill purchased other equipment (tables &carts, ice machine, food heating trays and bags, helium tanks,music system, etc.) for $10000 with an estimated life of 10 yearsand no salvage value. Salaries and wages for the year total$105,867 including payroll taxes.
8. The company declared and paid a $50,000 cash dividend at theend of the first year.
9. Johnson & Hill is in the 35% corporate tax bracket.

*Be sure to include the TruckRental: $1,000 * 94 events = $94,000*

Prepare an income statement for the first year.

Prepare a balance sheet as of the end of the first year.

Prepare a statement of retained earnings as of the end of thefirst year.

Prepare a statement of cash flows for the first year using thedirect method in the Operating Activities section.

Complete a vertical analysis of the Income statement.