Question

Blooming Flower Company was started in 2018 when it acquired $60,700 cash from the issue of common stock. The following data summarize the company's first three years' operating activities. Assume that all transactions were cash transactions. 2018 2019 2020 $19,500 36,300 18,200 9,900 Purchases of inventory $23,300 26, 100 12,700 5,350 $10,700 30,400 17,400 8,030 Sales Cost of goods sold Selling and administrative expenses Required Prepare an income statement (use multistep format) and balance sheet for each fiscal year. (Hint: Record the transaction data for each accounting period in the accounting equation before preparing the statements for that year.)

Answer 1

Answer with working notes is given below

BLOOMING FLOWER COMPANY Income Statements For the year Ended December 31 2018 2019 Net Sales $26,100 $30,400 Cost of Goods sold -$12,700 -$17,400 Gross profit $13,400 $13,000 Operating expenses Other Operating expense -$8,030 Net Income $8,050 $4,970 2020 $36,300 -$18,200 $18,100 -$9,900 $8,200 2020 BLOOMING FLOWER COMPANY Balance Sheets As of year Ended December 31 I 2018 2019 Assets Merchandise inventory $10,600 $3,900 Cash $58,150 $69,820 Total Assets $68,750 $73,720 Liabilities Stockholders' equity Common stock $60,700 $60,700 Retained earnings $8,050 $13,020 Total Stockholders' Equity $68,750 $73,720 Total Liabilities and Stockholders' Equity $68,750 $73,720 $5,200 See working note below $76,720 See working note below $81,920 $0 Liabilities will be zero since all transactions are cash transactions So $60,700 $21,220 See working note below $81,920 $81,920 Working note: L A Opening Stock Year 2018 2019 2020 Income Statement Sales $26,100 $30,400 $36,300 B C (A+B-C) (Sales- COGS) Purchases Closing Stock| COGS Gross Profit $23,300 $10,600 $12,700 $13,400 $10,700 $3,900 $17,400 $13,000 $19,500 $5,200 $18,200 $18,100 $10,600 $3,900 Cost of Goods Sold = Opening stock + Purchases - Closing stock Closing stock = Opening stock + Purchase - Cost of Goods sold Balance Sheet Year Opening balance of Common stock Common stock issued during the year $60,700 Opening Retained Earnings BAB Closing Total Net Retained Stockholders' Income Earnings Equity $8,050 $8,050 $68,750 $4,970 $13,020 $73,720 $8,200 $21,220 $81,920 2018 2019 2020 $60,700 $60,700 $8,050 $13,020 Retained Earnings = Opening balance + Net Income during the year Year 2018 2019 2020 Merchandise Inventory $10,600 $3,900 $5,200 Cash $58,150 $69,820 $76,720 A+B Total Assets $68,750 $73,720 $81,920 Working note for cash balance в т (A+B-C-D) Year Opening Cash balance А Cash proceeds from Common stock $60,700 Cash sales Net Cash C / D Cash Cash Operating Purchase Expense $23,300 $5,350 $10,700 $8,030 $19,500 $9,900 2018 2019 2020 $58,150 $69,820 $26,100 $30,400 $36,300 $58,150 $69,820 $76,720