The Wedding Shop (TWS) started the 2013 accounting period with the balances given in the financial statements model shown below. During 2013 TWS expierienced the following business events:
1) Purchased $60,000 of merchandise inventory on account, terms 2/10, n/30.
2) The goods that were purchased in Event 1 were delivered FOB shipping point. Freight costs of $1,500 were paid in cash by the responsible party.
3) Returned $3,000 of goods purchased in Event 1.
4a) Recorded the cash discount on goods purchased in Event 1.
4b) Paid the balance due on the account payable withn the discount period.
5a) Recognized $59,000 of cash revenue from sale of merchandise.
5b) Recognized $45,000 of cost of goods sold.
6) The merchandise in Event 5a was sold to customers FOB destination. Freight cost of $1,400 were paid in cash by the responsible party.
7) Paid ash of $9,000 for selling and administrative expenses.
8) Sold land for $14,500 cash.
Required:
A. Record the above transactions in a financial statements model like the ne shown below.
Event No. Cash + Inventory + Land = Accts. Pay. + Com Stk. + Ret. Earn. Rev/Gain - Exp. = Net Inc. Cash Flow
Bal. $60,000 + $8,000 + $12,000 = -0- + $50,000 + $30,000 N/A - N/A = N/A N/A
B. Prepare a multistep income statement. Include common size percentages on the income.
C. TWS's gross margin percentage in 2012 was %34. Based on the common size data in the income statement, did TWS raise or lower its prices in 2013?
D. Assuming a %5 rate of growth, what is the amount of net income expected for 2014?