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Problem - To support herself while attending school, Daun Deloch sold stereo systems to other students. During the ?rst year of operations, Deloch purchased the stereo systems for $166,000 and sold them for $312,000 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 4 percent of sales. During the year, she paid $2,560 cash to replace a defective tuner.
Required -
1. Prepare an income statement for Deloch's first year of operation.
2. Prepare a statement of cash ?ows for Deloch's first year of operation.
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