Question

On January 1, 2014, Laura started a small flower merchandising business that she named Laura’s Flowers. The company experienced the following events during the first year of operation.
1. Started the business by issuing common stock for $20,000 cash.
2. Paid $14,000 cash to purchase inventory.
3. Sold merchandise that cost $8,000 for $18,000 on account.
4. Collected $15,000 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. Prepare an income statement, a balance sheet, and a statement of cash flows.
c. Since Laura sold inventory for $18,000, she will be able to recover more than half of the $20,000 she invested in the stock. Do you agree with this statement? Why or why not?



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  • CreatedMay 22, 2014
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