Lily Rosenwald had always wanted to be a florist. She spoke with three friends and asked then to help her start her new business. They agreed and on January $1,2022,$ two friends made an investment and one a loan to Lily's business, Lilly's Green Thumb. Lily's friend, Sally, gave her a new truck valued at $$20,000$ to use for floral deliveries. Lily estimated that the truck had a ten$-$year useful life. Vivian, Lily's other friend gave Lily $$10,000$ as start$-$up capital, which Lily deposited in a new bank account in the name of her new business. In return for their investment, Lily issued common stock to them. Lily's friend, Frank also loaned Lily $$2000$ for her business.

Lily rented space for her flower shop, purchased supplies and inventory, and hired two staff people $($ one to work the counter and the other to make deliveries. Although hers was primarily a cash and national credit card business, Lily did bin select commercial customers monthly for large flower and landscaping orders. As her monthly business grew, Lily decided to apply for a bank loan to borrow funds for further expansion. Because she had been so busy, Lily realized she had kept few records other than the business checkbook and a list of amounts owed to her by customers. She realized that she would need a complete set of financial statements for the period ended March $31,2022.$ She has asked you to prepare a beginning and ending balance sheet and income statement for her business.

On March $31,2022,$ Lily's Green Thumb's checkbook shows a balance of$$55,500$ and her customers still owe her $$15,000.$ During the period, the business collected $$60,000$ from customers. The checkbook lists payments for supplies totaling $$2,000,$ and inventory totaling $$3,000.$ Of the supplies and inventory, $$600$ and $$1,000$ is still on hand, respectively.

She paid employees $$5,200$ and still owes them $$800$ for the last week of March. Lily purchased on account equipment from Office Works, Inc. for $$6,000,$ payable on April $1,2002.$ She estimates a $3-$year useful life for the equipment. She paid $$1,500$ in rental expense for her office space during the period. She, also, paid $$800$ to repair the muffler on her truck. She paid dividends to her friends of $$2,000$ for the period. Finally, Lily paid Frank back the money she borrowed on March $15,2022.$

You have been hired by Deep Pockets Bank to compile Lily's financial statements and evaluate the viability of the business.

Required:

Prepare the income statement of Lily's Green Thumb for the three months January $1$ through March $31,2022.$ The business is not subject to income taxes.

Prepare the beginning and ending balance sheets of Lily's Green Thumb at January $1,2022$ and March $31,2022.$

Evaluate for the bank whether Lily's Green Thumb is a good business venture and whether they should make the loan to Lily's Green Thumb. Why or Why not?