Question

The following events apply to Mia’s Gift Shop for 2013, its first year of operation:
1. Acquired $60,000 cash from the issue of common stock.
2. Issued common stock to Mia Smart, one of the owners, in exchange for merchandise inventory worth $3,200 Mia had acquired prior to opening the shop.
3. Purchased $56,200 of inventory on account.
4. Paid $4,500 for advertising expense.
5. Sold inventory for $98,300 cash.
6. Paid $12,000 in salary to a part-time salesperson.
7. Paid $47,000 on accounts payable (see Event 3).
8. Physically counted inventory, which indicated that $16,000 of inventory was on hand at the end of the accounting period.

Required
a. Record each of these events in general journal form. Mia’s Gift Shop uses the periodic system.
b. Post each of the events to ledger T-accounts.
c. Prepare an income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for 2013.
d. Prepare the necessary closing entries at the end of 2013, and post them to the appropriate T-accounts.
e. Prepare a post-closing trial balance.
f. Discuss an advantage of using the periodic system instead of the perpetual system.
g. Why is the common stock issued on the statement of changes in stockholders’ equity different from the common stock issued in the cash flow from financing activities section of the cash flow statement?



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  • CreatedOctober 26, 2013
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