Diamond Supply Company had the following transactions in 2016: 1. Acquired $50,000 cash from the issue of

Question:

Diamond Supply Company had the following transactions in 2016:

1. Acquired $50,000 cash from the issue of common stock.

2. Purchased $120,000 of merchandise for cash in 2016.

3. Sold merchandise that cost $95,000 for $180,000 during the year under the following terms:

$ 50,000 Cash sales

115,000 Credit card sales (The credit card company charges a 3 percent service fee.)

15,000 Sales on account

4. Collected all the amount receivable from the credit card company.

5. Collected $11,300 of accounts receivable.
6. Paid selling and administrative expenses of $51,500.

7. Determined that 5 percent of the ending accounts receivable balance would be uncollectible.

Required

a. Show the effects of each of the transactions on the elements of the financial statements, using a horizontal statements model like the one shown here. Use + for increase, - for decrease, and NA for not affected. The first transaction is entered as an example.

Diamond Supply Company had the following transactions in 2016:
1. Acquired

b. Prepare general journal entries for each of the transactions and post them to T-accounts.
c. Prepare an income statement, statement of changes in stockholders€™ equity, balance sheet, and statement of cash flows for 2016.

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...