1. [25 marks] Sam created a working model of a new and improved commercial paint spray he had patented. The patent had a legal life of 16 years remaining. Sam was eager to use his patent commercially, but he had no funds of his own. Several of Sam's friends, who had used Sam's paint spray prototypes, offered to invest in a new corporation. The total initial capital of the firm was $200,000 par value capital stock. Assume the year began on 01 Jan 20X0 and ended on 31 Dec 20X1. The other transactions undertaken by the company during the first year of its incorporation are given below: 1) In return for signing his patent to the new company (Passion Paints Ltd.), Sam would receive 60 percent of the company's capital stock. For their part, the investors would contribute $80,000 cash for a 40 per cent ownership in the company. 2) Incorporation costs, $2,500. 3) Equipment to be used in assembling the paint spray dispensers bought for cash, $85,000. 4) Out-of-pocket labor and development costs to redesign the paint spray dispenser to facilitate more efficient assembling, $25,000. 5) Component part (inventory) purchases for cash, $212,100. 6) Short-term loan from local bank, $30,000. (Loan to be repaid before the end of the year with $500 interest.) 7) Manufacturing payroll, $145,000. 8) Other manufacturing costs (excluding component part costs), $62,000. 9) Selling, general, and administration costs, $63,000. 10) Ending component parts inventory cost, $15,100. 11) Sales, $598,500 (all received in cash.) 12) All incorporation and product redesign costs are expensed as incurred. 13) Depreciation of equipment bought in transaction number 3. Sam estimated the useful life of the equipment was 10 years, and equipment cost to be depreciated using the straight-line method. 14) The patent cost is to be allocated as amortisation expense over six years, using straight- line assumption (Sam anticipated technology developments incorporating digital flow controls would significantly reduce the current product sales in about six years). Note: Amortization is to intangible assets what depreciation is to tangible assets. 15) Cash dividends, $5,000. 16) Income tax expense, $22,500 (due to be paid during the next year). 17) All amounts due to employees, suppliers, and others, except for income taxes, are paid in cash. Required: For the first year of company's operations: Prepare: a. The Cash Ledger. b. The Income Statement, and c. The year-end balance sheet (report only closing balances) Note: No individual journal entries are required. Only provide adequate answers in proper format.