Part One: In 2015, Patsy Jackson opened Patsy's Posies, a small retail shop selling floral arrangements. On December 31, 2016, her accounting records show the following:

Sales revenue .................................................................................................. $53,000

Utilities for shop ................................................................................................. $ 1,100

Inventory on December 31, 2016 ...................................................................... $ 9,100

Inventory on January 1, 2016 ........................................................................... $12,000

Rent for shop ..................................................................................................... $ 4,600

Sales commissions ............................................................................................ $ 4,000

Purchases of merchandise ............................................................................... $36,000

Requirement

Prepare an income statement for Patsy's Posies, a merchandiser, for the year ended December 31, 2016.

Part Two: Patsy's Posies was so successful that Patsy decided to manufacture her own brand of floral supplies: Floral City Manufacturing. At the end of December 2017, her accounting records show the following:

Utilities for plant .............................................................................................. $ 4,900

Delivery expense ............................................................................................ $ 1,500

Sales salaries expense ................................................................................... $ 4,300

Plant janitorial services ................................................................................... $ 1,350

Work in process inventory, December 31, 2017 ............................................. $ 5,000

Finished goods inventory, December 31, 2016 ........................................................ 0

Finished goods inventory, December 31, 2017 .............................................. $ 2,500

Sales revenue ............................................................................................. $ 104,000

Customer service hotline expense .................................................................. $ 1,400

Direct labor .................................................................................................... $ 23,000

Direct material purchases .............................................................................. $ 30,000

Rent on manufacturing plant ........................................................................... $ 9,600

Raw materials inventory, December 31, 2016 .............................................. $ 14,000

Raw materials inventory, December 31, 2017 ................................................ $ 8,000

Work in process inventory, December 31, 2016 ....................................................... 0

Requirements

1. Calculate the Cost of Goods Manufactured for Floral City Manufacturing for the year ended December 31, 2017.

2. Prepare an income statement for Floral City Manufacturing for the year ended December 31, 2017.

3. How does the format of the income statement for Floral City Manufacturing differ from the income statement of Patsy's Posies?

Part Three: Show the ending inventories that would appear on these balance sheets:

1. Patsy's Posies at December 31, 2016

2. Floral City Manufacturing at December 31, 2017