Question

The following trial balance pertains to Cal’s Grocery as of January 1, 2014:
Account Title Beginning Balances
Cash ............ $ 52,000
Accounts receivable ...... 8,000
Merchandise inventory ..... 100,000
Accounts payable ....... 8,000
Common stock ........ 86,000
Retained earnings ....... 66,000
The following events occurred in 2014. Assume that Cal’s uses the periodic inventory method.
1. Purchased land for $40,000 cash.
2. Purchased merchandise on account for $252,000, terms 1/10, n/45.
3. Paid freight of $2,000 cash on merchandise purchased FOB shipping point.
4. Returned $7,200 of defective merchandise purchased in Event 2.
5. Sold merchandise for $172,000 cash.
6. Sold merchandise on account for $240,000, terms 2/10, n/30.
7. Paid cash within the discount period on accounts payable due on merchandise purchased in Event 2.
8. Paid $23,200 cash for selling expenses.
9. Collected $95,000 of the accounts receivable from Event 6 within the discount period.
10. Collected $62,000 of the accounts receivable but not within the discount period.
11. Paid $13,200 of other operating expenses.
12. A physical count indicated that $53,100 of inventory was on hand at the end of the accounting period.

Required
a. Record the above transactions in a horizontal statements model like the following one.


b. Prepare a schedule of cost of goods sold and an incomestatement.


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  • CreatedMay 22, 2014
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