EXHIBIT 1 Prepared by SA Hinchliffe CASE FACTS AND CIRCUMSTA

EXHIBIT 1- Prepared by S.A. Hinchliffe CASE FACTS AND CIRCUMSTANCES Arborista, Inc. plants trees and shrubs for homeowners. The trees are purchased from and delivered by a sister company, Trees-R-Us, Inc.; Arborista specializes in planting. Arborista obtained capital from family members in exchange for common stock, which provides an ownership interest to the family members. On December 1st, a total of $50,000 was raised by issuing 10,000 shares of stock. An additional $20,000 was borrowed from their hometown bank, also on December 1st. The principal must be repaid at the end of two years, along with 6% interest annually, which accrues as time passes. Also on December 1st, Arborista took delivery of, and began using in the business, two previously- owned Ford F-250 pick-ups for which it paid cash of $7,000 each. These trucks are expected to last for 5 more years and the best guess is that each will be worth $1,000 at the end of the 5 year period. Arborista hired employees to do the planting. Arborista decided to charge $75 for planting each tree. The worker planting the tree will receive $20 per tree as her wage. On December 18th, a client came into the office to arrange to have trees planted on his property. The client wanted 30 trees/shrubs planted. Arborista scheduled the work for the next day. The client paid in cash and Arborista paid the employee the same day in cash. Required: Prepare a balance sheet, income statement, and statement of cash flows as of December 31s.

Solution

Balance sheet as on 31st December Income statement in the books of Arborista Common Stock $50,000.00 Fixed Asset Tree plantation charges $2,250.00 ( 10,000 share issued) 2 Truck $14,000.00 ( $75*30 Trees) Accumulated Depreciation $200.00 $13,800.00 6% loan borrowed $20,000.00 Less Wages paid $600.00 Cash in Hand $71,650.00 ( $20*30 Trees) Loan from Arborista for Truck $14,000.00 ( as per W/N-1) Deprecition on truck Intrerest on Loan Payable $100.00 ( Cost of machine-salvage value)/Expected life $200.00 Net Profit earned during the year $1,350.00 (14000-2000)/5*1month/12 month Interest on Borrowed Loan $100.00 Total Equity & Liabilities $85,450.00 Total Asset $85,450.00 ( 20000*6%*1month/12 Monht Net Income $1,350.00 working Note:-1Cash Balance in Hand Recived through issue of share $ 50,000.00 Cash flow statement Revied through borrowed fund $ 20,000.00 Tree plantation charges recived $    2,250.00 Cash flow from Operation activities Less wages paid $        600.00 Net Income $1,350.00 Add Depreciation 200 Net Cash available $ 71,650.00 Add Interest on borrowed fund 100 Cash flow from operation (a) $1,650.00 Cash flow from Investing activities Purchase 2 truck -$14,000.00 Cash flow from Investing activities (b) -$14,000.00 Cash flow from Financing   activities Issue common stock $50,000.00 received cash from borrowed fund 20000 Recived cash from arborista for procured truck $14,000.00 Cash flow from Financing activities © $84,000.00 Net cash flow ( a+b+c) $71,650.00