Part One: In 2012, Robin Prough opened Robin’s Roses, a small shop selling floral ­arrangements. On December 31, 2013, her accounting records show the following: Sales revenue................................................................................................. $ 59,000

Utilities for shop............................................................................................. $ 1,200

Inventory on December 31, 2013.................................................................. $ 9,900

Inventory on January 1, 2013......................................................................... $ 12,000

Rent for shop.................................................................................................. $ 3,600

Sales commissions.......................................................................................... $ 4,600

Purchases of merchandise.............................................................................. $ 34,000

Requirement

Prepare an income statement for Robin’s Roses, a merchandiser, for the year ended ­December 31, 2013.

Part Two: Robin’s Roses succeeded so well that Robin decided to manufacture her own brand of floral supplies: Floral Manufacturing. At the end of December 2014, her ­accounting records show the following:

Utilities for plant..................................................................................................... $ 4,400

Delivery expense.................................................................................................... $ 2,000

Sales salaries expense............................................................................................ $ 4,700

Plant janitorial services........................................................................................... $ 1,050

Work in process inventory, December 31, 2014.................................................... $ 3,500

Finished goods inventory, December 31, 2013..................................................... 0

Finished goods inventory, December 31, 2014..................................................... $ 6,500

Sales revenue......................................................................................................... $ 102,000

Customer service hotline expense......................................................................... $ 1,100

Direct labor............................................................................................................ $ 21,000

Direct material purchases....................................................................................... $ 35,000

Rent on manufacturing plant................................................................................. $ 8,600

Raw materials inventory, December 31, 2013........................................................ $ 14,000

Raw materials inventory, December 31, 2014........................................................ $ 10,500

Work in process inventory, December 31, 2013.................................................... 0

Requirements

1. Calculate the cost of goods manufactured for Floral Manufacturing for the year ended December 31, 2014.

2. Prepare an income statement for Floral Manufacturing for the year ended December 31, 2014.

3. How does the format of the income statement for Floral Manufacturing differ from the income statement of Robin’s Roses?

Part Three: Show the ending inventories that would appear on these balance sheets:

1. Robin’s Roses at December 31, 2013.

2. Floral Manufacturing at December 31, 2014.