Comprehensive Cycle Problem
At the beginning of 2012, the Jeater Company had the following balances in its accounts:
Cash $4,300
Inventory 9,000
Common Stock 10,000
Retained Earnings 3,300
During 2012, the economy experienced the following events:
1. Purchased inventory that cost $2,200 on account from Blue Company under terms 1/10, n/30. The merchandise was delivered FOB shipping point . Freight costs of $110 were paid in cash.
2. Returned $200 of the inventory that it had purchased because the inventory was damaged in transit. The freight company agreed to pay the return freight cost.
3. Paid the amount due on its accounts payable to blue company within the cash discount period.
4. Sold inventory that had cost $3,000 for $5,500 on account under terms 2/10 n/45
5. Received merchandise returned from a customer . The merchandise originally cost $400 and was sold to the customer for $710 cash during the previous accounting period. the coustomer was paid $710 cash for the returned merchandise.
6. Delivered goods FOB destination in event 4. Freight cost of $60 were paid in cash.
7. Collected the amount due on the account receivable within the discount period.
8. Took a physical count indicating that $7,970 of inventory was on hand at the end of the accounting period.
A. identify these events as asset source (as) asset use (ua) asset exchange (ae) or claims exchange (ce)
B. record each event in a statements model like the following one.
balance sheet income statement
[event] assets = liab. = equity rev.-exp.= net inc. [statement of cash flows]
cash +accts. rec + mdse.inv = accts pay. + ret earn.
c. prepare an income statement , a statement of changes in stockholders equity, a balance sheet and a statement of cash flows.