1) Dan Watson started a small merchandising business in Year 1. The business experienced the following events...
Question:
- 1) Dan Watson started a small merchandising business in Year 1. The business experienced the following events during its first year of operation. Assume that Watson uses the perpetual inventory system.
- Acquired $27,500 cash from the issue of common stock.
- Purchased inventory for $22,000 cash.
- Sold inventory costing $17,200 for $32,000 cash.
Required
- Record the events in general journal format.
- Post the entries to T-accounts.
- Determine the amount of gross margin.
- What is the amount of net cash flow from operating activities for Year 1?
- question 2
On April 6, Year 1, Home Furnishings purchased $44,000 of merchandise from Una Imports, terms 3/10, n/45. On April 8, Home returned $9,200 of the merchandise to Una Imports for credit. Home paid cash for the merchandise on April 15, Year 1.
Required
What is the amount that Home Furnishings must pay Una Imports on April 15?
Record the events in a horizontal statements model. In the Cash Flow column, use OA to designate operating activity, IA for investing activity, FA for financing activity, or NC for net change in cash. If the element is not affected by the event, leave the cell blank.
How much must Home Furnishings pay for the merchandise purchased if the payment is not made until April 20, Year 1?
Record the payment of the merchandise in Requirement (c) in a horizontal statements model. In the Cash Flow column, use OA to designate operating activity, IA for investing activity, FA for financing activity, or NC for net change in cash. If the element is not affected by the event, leave the cell blank.
- question 3
3. The following information was drawn from the Year 1 accounting records of Ozark Merchandisers:
- Inventory that had cost $15,600 was sold for $23,400 under terms 2/20, net/30.
- Customers returned merchandise to Ozark five days after the purchase. The merchandise had been sold for a price of $550. The merchandise had cost Ozark $440.
- All customers paid their accounts within the discount period.
- Selling and administrative expenses amounted to $2,340.
- Interest expense paid amounted to $210.
- Land that had cost $6,100 was sold for $7,320 cash.
Required
a. Determine the amount of net sales.
b. Prepare a multistep income statement.
c. Where would the interest expense be shown on the statement of cash flows?
d. How would the sale of the land be shown on the statement of cash flows?
Survey of Accounting
ISBN: 978-1259631122
5th edition
Authors: Thomas Edmonds, Christopher Edmonds, Philip Olds, Frances McNair, Bor Yi Tsay