Question: Northwest Sales had the following transactions in 2016 1 The business

Northwest Sales had the following transactions in 2016:
1. The business was started when it acquired $200,000 cash from the issue of common stock.
2. Northwest purchased $900,000 of merchandise for cash in 2016.
3. During the year, the company sold merchandise for $1,200,000. The merchandise cost $710,000. Sales were made under the following terms:
a. $520,000 Cash sales
b. 380,000 Credit card sales
c. 300,000 Sales on account
4. The company collected all the amount receivable from the credit card company.
5. The company collected $210,000 of accounts receivable.
6. The company paid $190,000 cash for selling and administrative expenses.
7. Determined that 5 percent of the ending accounts receivable balance would be uncollectible.
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.
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.

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  • CreatedApril 20, 2015
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