Exercise 3-1

Record events in accounting equation.

Event	ASSETS			=	LIABILITIES	+	STOCKHOLDERS EQUITY
	Cash	Accounts Receivable	Inventory	=	Liabilities	+	Common Stock	Retained Earnings	Account Title for RE
1.
2.
3a.
3b.
4.
5.
Ending Balances, 12/31/14

Prepare an income statement and a balance sheet for Lauras Flowers.

Exercise 3-1 Determining the cost of financing inventory On January 1, 2014, Laura started a small flower merchandising business that sh Laura's Flowers. The company experienced the following events during the first year of e named 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 t o recover more than half of the $20,000 she invested in the stock. Do y ou agree with this statement? Why or why not