BACKGROUND: Understanding accounting information goes far beyond the ability to compute financial values and record journal entries. It is also essential that preparers and users of financial information understand how transactions affect the elements of the financial statements.

REQUIRED: Wilson Lawn & Garden sells lawn and garden equipment and products, including 50-pound bags of fertilizer. Use the following information to show how Wilson's June purchases and sales of 50-pound fertilizer bags impacted its statement of cash flows, income statement, and balance sheet during the month. For the balance sheet, indicate changes to the balance sheet. These amounts will not necessarily equal the June 30 ending balances in the balance sheet accounts. Some lines might not have answers. List account names or transaction descriptions in the first column and amounts in the second column. The company uses a perpetual inventory system.

June Cost of Goods Sold is $11,750

Ending inventory on June 30 is $7,350

Wilson purchased $16,100 of inventory on account during the month of June.

There was a $4,200 beginning balance in the Accounts Payable account on June 1.

Suppliers were paid $13,500 during the month of June.

Wilson earned $15,700 of revenue on sales of the fertilizer bags. $5,500 of the revenue related to cash sales and the rest were credit sales.

There was no beginning balance in the Accounts Receivable account.