Problem 3-1 The following information is available for two different types of businesses for the 2016 accounting period. Earl CPAs is a service business that provides accounting services to small businesses. Griffin is a merchandising business that sells sports clothing to college students. Data for Earl CPAS 2. Provided 3. Paid salary expense of $225,000 from the bank to start the business $157,500 of services to customers and collected $112,500 $157,500 cash. Data for Griffin Borrowed Purchased $225,000 from the bank to start the business $144,000 inventory for cash 2. 3. Inventory costing $82,800 was sold f cash. Paid $18,900 cash for operating expenses. REQUIRED a. Prepare an income statement, a balance sheet, and a statement of cash flows for each of the companies. This is different than completing a horizontal model. A horizontal model can help organize the transaction b. Which of the two businesses would have product costs or cost of goods? Why? c. Why does Earl CPAs not compute gross margin on its income statement? d. Compare the assets of both companies. What assets do they have in common? What assets are different? Why