Question: On January 1, 2012, Sam started a small sailboat merchandising business that he named Sams Boats. The company experienced the following events during the first

On January 1, 2012, Sam started a small sailboat merchandising business that he named Sam’s Boats. 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 $22,000 cash to purchase inventory.

3. Sold a sailboat that cost $12,000 for $24,000 on account.

4. Collected $14,000 cash from accounts receivable.

5. Paid $5,800 for operating expenses.

Required

a. Organize ledger accounts under an accounting equation and record the events in the accounts.

b. Prepare an income statement, balance sheet, and statement of cash flows.

c. Since Sam sold inventory for $24,000, he will be able to recover more than half of the $30,000 he invested in the stock. Do you agree with this statement? Why or why not?

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