
Exercise 3-1 Determining the cost of financing inventory
On January 1, 2018, Jana started a small flower merchandising business that she named Jana’s Flowers. The company experienced the following events during the first year of operation:
1. Started the business by issuing common stock for $30,000 cash.
2. Paid $19,000 cash to purchase inventory.
3. Sold merchandise that cost $10,000 for $21,000 on account.
4. Collected $16,000 cash from
5. Paid $3,750 for operating expenses.
Required
a. Organize ledger accounts under an
b. Prepare an income statement, a
c. Since Jana sold inventory for $21,000, she will be able to recover more than half of the $30,000 she invested in the stock. Do you agree with this statement? Why or why not?

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Chapter 3 Solutions
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