Problem 3-1 The following information is available for two different types of businesses for the 2018 accounting period. Sanderz CPAs is a service business that provides accounting services to small businesses. Thump is a merchandising business that sells sports clothing to college students. Data for Thump 1. 2. 3. 4. $100,000 from the bank to start the business. Borrowed Purchased $64,000 inventory for cash. Inventory costing $36,800 was sold for $60,000 cash Paid $8,400 cash for operating expenses Data for Sanderz CPAs 1. Borrowed 2. Provided 3. Paid salary expense of $100,000 from the bank to start the business. $70,000 of services to customers and collected $50,000 70,000 cash. 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 transactions. b. Which of the two businesses would have product costs or cost of goods? Why? c. Why does the CPA firm 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