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, 2002, 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, 2002. She has asked you to prepare a beginning and ending balance sheet and income statement for her business.

On March 31, 2002, 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, 2002.

Prepare the income statement of Lily's Green Thumb for the three months January 1 through March 31, 2002. The business is not subject to income taxes.