Question

On January 1, 2018, Jana started a small flower merchandising business that she named Jana’s Flowers. The company experienced the following events during the first year of operation:

1.Started the business by issuing common stock for $30,000 cash.

2.Paid $19,000 cash to purchase inventory.

3.Sold merchandise that cost $10,000 for $21,000 on account.

4.Collected $16,000 cash from accounts receivable.

5.Paid $3,750 for operating expenses.

Required

a. Organize ledger accounts under an accounting equation and record the events in the accounts. In the last column of the table, provide appropriate account titles for the Retained Earnings amounts.

b-1. Prepare an income statement.

b-2. Prepare a balance sheet.

b-3.Prepare a statement of cash flows.

c. Since Jana sold inventory for $21,000, she will be able to recover more than half of the $30,000 she invested in the stock. Do you agree with this statement?

Organize ledger accounts under an accounting equation and record the events in the accounts. In the last column of the table, provide appropriate account titles for the Retained Earnings amounts. (Select "NA" if there is no effect on the "Accounts Titles for Retained Earnings". Enter any decreases to account balances with a minus sign.)

	JANA'S FLOWERS Effect of Events on the Accounting Equation Event Assets = Stockholders’ Equity Accounts Titles for Retained Earnings Cash + Accounts Receivable + Inventory = Common Stock + Retained Earnings 1. + + = + 2. + + = + 3a. + + = + 3b. + + = + 4. + + = + 5. + + = + Total + + = +

	JANA'S FLOWERS Income Statement For the Year Ended December 31, 2018 Cost of goods sold Gross margin Operating expenses Net income

Prepare a balance shee

Prepare a balance sheet.

	JANA'S FLOWERS Balance Sheet As of December 31, 2018 Assets Cash Merchandise inventory Accounts receivable Total assets Liabilities Stockholders' Equity Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity

Prepare a statement of cash flows. (Amounts to be deducted should be indicated with a minus sign.)

	JANA'S FLOWERS Statement of Cash Flows For the Year Ending December 31, 2018 Cash flows from operating activities Cash inflow from stock issue Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities Net cash flows from financing activities Net change in cash Plus: Beginning cash balance Ending cash balance

Answer 1