Peters Company was in business for two years, during which time it entered into the following transactions:
1. The owners contributed $24,000 cash.
2. At the beginning of the year, rented a warehouse for two years with a prepaid rent payment of $12,000.
3. Purchased $10,000 of inventory on account.
4. Sold half the inventory for $24,000, receiving $20,000 in cash and an account receivable of $4,000.
5. Paid salaries and wages of $6,000 and also accrued salaries and wages payable of $4,000.
1. Paid the outstanding balance for the inventory purchased in Year 1.
2. Paid the outstanding salaries and wages payable balance.
3. Sold the remaining inventory for $30,000 cash.
4. Received full payment on the outstanding accounts receivable.
5. Incurred and paid salaries and wages of $12,000.
6. Returned the cash balance to the owners and shut down operations.
a. Prepare an income statement and a statement of cash flows for both Year 1 and Year 2. (Assume a December 31 closing date)
b. Complete a chart like the following.