Laura started a flower merchandising business called Laura's Flowers on January 1, 2014. During the first year, she issued $18,000 in common stock, purchased $12,000 of inventory, sold $9,000 of merchandise for $19,000 in accounts receivable, collected $16,000 from accounts receivable, and paid $4,500 in operating expenses.

1. On January 1, 2014, Laura started a small flower merchandising business that she named
Laura’s Flowers. The company experienced the following events during the first year of
operation.
1. Started the business by issuing common stock for $18,000 cash.
2. Paid $12,000 cash to purchase inventory.
3. Sold merchandise that cost $9,000 for $19,000 on account.
4. Collected $16,000 cash from accounts receivable.
5. Paid $4,500 for operating expenses.
Solution
Income statement sales         19,000 Less: cost of goods sold
          9,000 Less: operating expenses           4,500 Net
income           5,500 Cash flows statement: Common stock issue
        18,000 Paid for inventory -      12,000 cash collected from
accounts receiavable         16,000 Operating expenses          Â
4,500 Closing cash balance         26,500 More information required for balance
sheet