Comprehensive cycle problem: Perpetual system
At the beginning of 2012, the Jeater Company had the following balances in its accounts:
Cash $ 4,300
Inventory $9,000
Common stock 10,000
Retained earnings 3,300
During 2012, the company experienced the following events.
- Purchased inventory that cost $2,200 on account from Blue Company under terms 1/10, n/30.
The merchandise was delivered FOB shipping point. Freight costs of $110 were paid in cash.
- Returned $200 of inventory that is had purchased because the inventory was damaged in transit. The freight company agreed to pay the return freight cost.
- Paid the amount due on its account payable to Blue Company within the cash discount period.
- Sold inventory that had cost $3,000 for $5,500 on account, under terms 2/10, n/45.
- 5. Received merchandise returned from a customer. The merchandise originally cost $400 and was sold to the customer for $710 cash during the previous accounting period. The customer was paid $710 cash for returned merchandise.
- Deliver goods FOB destination in Event 4. Freight costs of $60 were paid in cash.
- Collected the amount due on the account receivable within the discount period.
- Took a physical count indicating that $7,970 of inventory was on hand at the end of the accounting period.
Required
- Identify these events as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE).
- Record each event in a statements model like the following one.
| Balance Sheet |
EVENTS Assets = Liability = Equity
Cash + Acct’s Rec. + Mdse, Inv. = Accts Pay. + Ret. Earn.
| Income Statement |
Rev. – Exp. = Net Inc.
| Statement of Cash Flow |
- Prepare an income statement, a statement of changes in stockholders’ equity, a balance sheet, and a statement of cash flows.
ScholarMatic: Explanation & Answer
Your ready answer from a verified tutor is just a click away for as little as $14.99
Click Order Now to get 100% Original Answer Customized to your instructions!
