On January 1, 2014 Laura started a small flower merchandising business that she named Lauras flowers. The company experienced the following events during the first year of 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 on account.

4. Collected 15,000 cash from accounts receivable.

Required

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

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 to recover more than half of 20,000 she invested in the stock. Do you agree with this statement.