On January 1, 2018, Jana started a small flower merchandising business that she named Janaâs 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.
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?
On January 1, 2018, Jana started a small flower merchandising business that she named Janaâs 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.
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?
Related questions
Milo Clothing experienced the following events during 2016, itsfirst year of operation:
| 1. | Acquired $30,000 cash from theissue of common stock. | ||
| 2. | Purchased inventory for $15,000cash. | ||
| 3. | Sold inventory costing $9,000for $20,000 cash. | ||
| 4. | 4. Paid $1,500 for advertising expense.
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| The followingtransactions apply to Bobâs Bike Shop for 2016, its first year ofoperations: |
| 1. | Acquired $35,000 cash from theissue of common stock. |
| 2. | Acquired $9,600 of merchandise from Bob Hall, the owner, who hadacquired the merchandise prior to opening the shop. Issued commonstock to Bob in exchange for the merchandise inventory. |
| 3. | Purchased $85,000 of inventoryon account. |
| 4. | Paid $2,800 for radio ads. |
| 5. | Sold inventory for $165,000cash. |
| 6. | Paid $28,000 in salary to apart-time salesperson. |
| 7. | Paid $65,000 on accounts payable(see Event 3). |
| 8. | Physically counted inventory, which indicated that $28,500 ofinventory was on hand at the end of the accounting period. A. Record each transaction in general journal form using theperiodic method: record entry for issuance of common stock, recordentry for issuance of common stock in exchange for the merchandiseinventory, record entry for inventory purchased on amount, recordentry for radio ads paid, record sale of inventory for cash, recordentry for salary paid to a part time sales person, record entrycash paid for accounts payable, record adjusting entry for physicalcounted inventory on hand at the end of the accounting period. B. Post each of the events to ledger T-accounts. C. Prepare an income statement of changes in stockholdersequity, balance sheet, and statement of cash flows. D. Prepare the necessary closing entries at the end of 2016, andpost them to the appropiate T-accounts. |
E. Prepare a post-closing trial balance
