Question

Blooming Flower Company was started in Year 1 when it acquired $60,700 cash from the issue of common stock. The following data summarize the company’s first three years’ operating activities. Assume that all transactions were cash transactions.

	Year 1			Year 2			Year 3
Purchases of inventory	$	22,800		$	10,800		$	18,600
Sales		26,300			30,600			36,100
Cost of goods sold		12,100			18,300			19,800
Selling and administrative expenses		5,390			8,160			9,950

Required
Prepare an income statement (use multistep format) and balance sheet for each fiscal year. (Hint: Record the transaction data for each accounting period in T-accounts before preparing the statements for that year.)
  

Answer 1

BLOOMING FLOWER COMPANY
INCOME STATEMENT
FOR THE YEAR …….
	FISCAL YEAR 1	FISCAL YEAR 2	FISCAL YEAR 3
INCOMES	(in $)	(in $)	(in $)
SALES	26,300	30600	36,100
LESS : COST OF GOODS SOLD	12,100	18300	19,800
GROSS PROFIT	14,200	12,300	16,300
LESS : SELLING & ADMINSTRATIVE EXPENSES	5390	8160	9950
PROFIT FOR THE YEAR	8,810	4,140	6,350
BLOOMING FLOWER COMPANY
BALANCE SHEET
FOR THE YEAR ……
	FISCAL YEAR 1	FISCAL YEAR 2	FISCAL YEAR 3
EQUITY & LIABILITIES	(in $)	(in $)	(in $)
SHAREHOLDERS FUND
COMMON STOCK	60,700	60,700	60,700
RESERVE & SURPLUS	8,810	12,950	19,300
TOTAL	69,510	73,650	80,000
ASSETS
CURRENT ASSETS
CASH	58810	70450	78000
INVENTORY	10,700	3,200	2,000
TOTAL	69,510	73,650	80,000