Exercise $3-17$A $($Algo$)$ Effect of purchase discounts on financial statements: Perpetual system LO $3-3,3-6$

Expert Computers was started in Year $1.$ The company experienced the following accounting events during its first year of operation:

Started business when it acquired $$82,000$ cash from the issue of common stock.

Purchased merchandise with a list price of $$66,000$ on account, terms $\frac{2}{10},\frac{n}{30}.$

Paid off one$-$half of the accounts payable balance within the discount period.

Sold merchandise on account for $$53,600.$ Credit terms were $\frac{1}{20},\frac{n}{30}.$ The merchandise had cost Expert Computers $$32,200.$

Collected cash from the account receivable within the discount period.

Paid $$9,800$ cash for operating expenses.

Paid the balance due on accounts payable. The payment was not made within the discount period.

Required:

a$.$ Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities $($OA$),$ investing activities $($IA$),$ or financing activities $($FA$).$ The first event is recorded as an example.

b$.$ What is the amount of gross margin for the period? What is the net income for the period?

Complete this question by entering your answers in the tabs below.

Required A

Required B

What is the amount of gross margin for the period? What is the net income for the perifid?

Gross margin

Net income