prepare income statement and balance sheet based on this case: "Naomi and Alana acquired the hotel after years of dreaming about running their own business. Both owners are close friends and have been involved in hospitality from a young age, with Naomi starting as a maid and Alana as an accomplished chef. They have a rich history and have established themselves as a cherished part of the community, providing a welcoming atmosphere for both locals and tourists in their past hotel. Naomi attended a community college where she took business courses part$-$time while working. She earned an associate's degree in business administration. She believes this degree helped her gain the knowledge and skills needed to manage the Sunset Nodin Hotel successfully and they do not need to hire an accountant. Naomi and Alana finally discovered a suitable building for the Sunset Nodin Hotel, which is a rundown property. After the purchase, Chief Eagleclaw, the town chief, informed them that they needed to get approval for rezoning the building, which they successfully obtained. The cost for rezoning the building to commercial was $$10,000.$ Naomi is not sure if this is an expense or a capital cost for the building. Naomi received a $$75,000$ cheque from her father, Talon. Naomi also borrowed $$30,000$ from her friend, Koda, to help cover the renovation costs. The purchasing price of the property was $$100,000$ and they paid $$5,000$ for other related costs including realtor fee, legal fee, building inspection fee, and land transfer tax. Upon inspecting the building, they were informed that the building needs renovations. They also needed to do some other expenses to make the property ready for operation. The renovation costs include $$35,000$ for structural repairs, $$30,000$ for interior renovations, and $$5,000$ for landscaping and exterior work. They also need to spend $$10,000$ on furnishings and decor to better reflect their First Nation culture. Additionally, they needed an initial sta$$ing cost of $$3,000$ and $$2,000$ for marketing and promotion. Naomi is unsure how to calculate the cost of capital and depreciation for the fixed assets, and where to include them on the balance sheets. To finance the costs, they had two options: $1)$ Borrow $$95,000$ from Naomi's parents and include them in decision making as partners, or $2)$ Borrow $$95,000$ from the bank at an interest of $10\%.$ The bank needed a minimum of debt$-$equity ratio of $1$:$1.$ The loan should also be secured by the assets of the business and must be paid back to the bank in $10$ years. Eventually, they decided to borrow from the bank. However, Naomi and Alana want you to evaluate the pros and cons of each of $2$ financing options and comment on their decision. They also need your help to conduct ratio analysis, such as the current ratio, debt$-$ to equity ratio, and return on assets to assess their financial health and guide their decisions. Naomi has learned about the depreciation at school and knows that the hotel's furniture and equipment, such as beds, kitchen appliances, and decor, need to be depreciated over time. She is certain that the depreciation of the property $($including renovations$)$ is $$7,000$ per year. However, she is unsure how to apply depreciation to accurately reflect the wear and tear of the furnishings. She needs your help in this matter. The furnishings cost is $$10,000$ with a useful life of $10$ years and the kitchen equipment valued at $$8,000$ with an estimated useful life of $10$ years."