Question
On January 1, 2018, Jana started a small flower merchandising business that she named Janas Flowers. The company experienced the following events during the first
On January 1, 2018, Jana started a small flower merchandising business that she named Janas Flowers. The company experienced the following events during the first year of operation:
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Started the business by issuing common stock for $28,000 cash.
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Paid $19,000 cash to purchase inventory.
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Sold merchandise that cost $13,000 for $28,000 on account.
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Collected $25,000 cash from accounts receivable.
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Paid $6,300 for operating expenses.
Required
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a. Organize ledger accounts under an accounting equation and record the events in the accounts. In the last column of the table, provide appropriate account titles for the Retained Earnings amounts.
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b-1. Prepare an income statement.
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b-2. Prepare a balance sheet.
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b-3.Prepare a statement of cash flows.
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c. Since Jana sold inventory for $28,000, she will be able to recover more than half of the $28,000 she invested in the stock. Do you agree with this statement?I started on 1 but wasn't sure if I was doing it right.
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