Now assume that COMPANY 2 has the following transactions In 20x7. Unless specified, assume all sales and purchases are on account (i.e., teceivaHes and payables). Assume the company adopts an expected sale return rate of 2% (again, based on the historic Information {or COMPANY 1).

1. Issued common stock for 100,000 in buildings and equipment and 75,000 In cash.

2. Purchased Inventory on account, 77,470.

3. Paid for freight In with cash (Inventory shipping), 6,350.

4. Paid a cash advance {or business insurance for the year, 7,500

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