Calloway Company was started on January 1, 2012, when the owners invested $40,000 cash in the business. During 2012, the company earned cash revenues of $18,000 and incurred cash expenses of $12,500. The company also paid cash distributions of $3,000.

Required

Prepare the 2012 income statement, capital statement (statement of changes in equity), balance sheet, and statement of cash flows using each of the following assumptions.

a. Calloway is a sole proprietorship owned by Macy Calloway.

b. Calloway is a partnership with two partners, Macy Calloway and Artie Calloway. Macy Calloway invested $25,000 and Artie Calloway invested $15,000 of the $40,000 cash that was used to start the business. A. Calloway was expected to assume the vast majority of the responsibility for operating the business. The partnership agreement called for A. Calloway to receive 60 percent of the profits and M. Calloway to get the remaining 40 percent. With regard to the $3,000 distribution, A. Calloway withdrew $1,200 from the business and M. Calloway withdrew $1,800.

c. Calloway is a corporation. It issued 5,000 shares of $5 par common stock for $40,000 cash to start the business.