Pedal City, a bike shop, opened for business on April 1. It uses a periodic inventory system.
Question:
Pedal City, a bike shop, opened for business on April 1. It uses a periodic inventory system. The following transactions occurred during the first month of business:
Required:
For all accounting equations, if a financial statement item is not affected, select "No Entry" and leave the amount box blank or enter "0". If the effect is negative, use the minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item.
1. Identify and analyze each of the following transactions of Pedal City.
April 1: Purchased five units from Giorgio, Inc. for $600 total, with terms 3/10, n/30, FOB destination.
How does this entry affect the accounting equation?
| Balance Sheet | Income Statement | |||||||||||||
| Stockholders' | Net | |||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | – | Expenses | = | Income | |||||
| No Entry | Accounts Payable | No Entry | Purchases | |||||||||||
April 10: Paid for the April 1 purchase.
| Balance Sheet | Income Statement | |||||||||||||
| Stockholders' | Net | |||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | – | Expenses | = | Income | |||||
| Cash | Accounts Payable | No Entry | No Entry | |||||||||||
April 15: Sold one unit for $200 cash.
How does this entry affect the accounting equation?
| Balance Sheet | Income Statement | |||||||||||||
| Stockholders' | Net | |||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | – | Expenses | = | Income | |||||
| Cash | No Entry | Sales Revenue | No Entry | |||||||||||
April 18: Purchased ten units from Bush Enterprises for $900 total, with terms 3/10, n/30, FOB destination.
How does this entry affect the accounting equation?
| Balance Sheet | Income Statement | |||||||||||||
| Stockholders' | Net | |||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | – | Expenses | = | Income | |||||
| No Entry | Accounts Payable | No Entry | Purchases | |||||||||||
April 25: Sold three units for $200 each, cash.
How does this entry affect the accounting equation?
| Balance Sheet | Income Statement | |||||||||||||
| Stockholders' | Net | |||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | – | Expenses | = | Income | |||||
| Cash | No Entry | Sales Revenue | No Entry | |||||||||||
April 28: Paid for the April 18 purchase.
| Activity | Operating |
| Accounts | Cash Decrease, Account Payable Decrease Cash Decrease, Account Payable Decrease |
| Statement(s) | Balance Sheet only |
How does this entry affect the accounting equation?
| Balance Sheet | Income Statement | |||||||||||||
| Stockholders' | Net | |||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | – | Expenses | = | Income | |||||
| Cash | Accounts Payable | No Entry | No Entry | |||||||||||
2. Determine net income for the month of April. Pedal City incurred and paid $100 for rent and $50 for miscellaneous expenses during April. Ending inventory is $967. (Ignore income taxes.)
3. Assuming that these are the only transactions during April (including rent and miscellaneous expenses), compute net cash flow from operating activities. Use the minus sign to indicate cash out flows, a decrease in cash or cash payments.
4. Cash outflow during the first month of business is much larger than expenses as shown on the income statement due to
Expert Answer:
SOLUTION REQUIREMENT1 JOURNAL ENTRIES DATE PARTICULARS DEBIT CREDIT APRIL1 PURCHASE UNITDR 600 TO AC... View the full answer
Using Financial Accounting Information The Alternative to Debits and Credits
ISBN: 978-1133161646
7th Edition
Authors: Gary A. Porter, Curtis L. Norton
