He has opened up a bank account with $20,000 in the company’s name.
Dr Cash 20,000
Cr Charlie Driver, Capital 20,000

From this account he has purchased a secondhand fully equipped truck for $16,000.
Dr Truck 16,000
Cr Cash 16,000

He paid cash during the year for food, beverages, and other supplies that he purchased from the catering company he was contracted to. According to invoices this totaled $25,296.
Dr Supplies 25,296
Cr Cash 25,296

He estimates year-end inventory in the truck to be $350.
25,296 – 350 = 24,946 supplies expense
Dr Supplies Expense 24,946
Cr Supplies 24,946

Charlie had no employees but took $2,000 a month out of the company for his own salary.
Dr Salaries Expense 24,000
Cr Cash 24,000
*Note: normally this would be debited to Charlie’s Drawing Account. But after reading the last requirements of the question, it looks like you’re supposed to debit it to salaries expense.

During the year he paid operating expenses (maintenance, gas, and oil, licensing) on the truck in cash. These expenses added up to $1,828. In addition there is one more unpaid repair invoice to come, for $254.
Dr Maintenance Expense 2,082
Cr Cash 1,828
Cr Accounts Payable 254

The two of you decide that, since the truck has an estimated five-year life with no scrap value, depreciation should be calculated on a straight-line basis over that period.
16,000 / 5 = 3,200 depreciation expense per year.
Dr Depreciation Expense–Truck 3,200
Cr Accumulated Depreciation–Truck 3,200

At the end of December, he had $11,110 in his bank account and $48 in change in the cash drawer in the truck.
11,110 + 48 = $11,158 ending cash balance.

From the ending cash balance, add back all cash disbursements.
11,158 + 16,000 + 25,296 + 24,000 + 1,828 = 78,282 this is how much cash he would have if there were no disbursements.
78,282 – 20,000 beginning cash balance = 58,282 This is how much cash would have increased. The only increases would come from revenues. So $58,282 was his revenue. Now just subtract his expenses.
58,282 – 24,946 – 24,000 – 2,082 – 3,200 = $4,054 Net Income

Explain why the cash in the bank is so much higher than the net income.
There are three reasons why the cash in the bank is so much higher than net income.
1) The bank account started out with $20,000
2) Although the depreciation expense of $3,200 was subtracted from revenues, it is a non-cash item. So it is not subtracted from the bank account.
3) The remaining accounts payable (254) was subtracted from revenues but not from the the cash in the bank.

Explain why the 3C Company started out with $20,000 in the bank, has a net income for the year, yet ended up with only about $11,000 in the bank.
Because of the expenditure for the truck (16,000) and the unused supplies (350) that were both paid for in cash. .