ACCT 505 Chapter 3 Homework

Problem 3-26 Comprehensive cycle problem: Perpetual system LO 3-2, 3-3, 3-4, 3-5

At the beginning of 2013, the Bradley Company had the following balances in its accounts: 

 Cash $ 8,200   Inventory 2,200   Common stock 7,700   Retained earnings 2,700 

During 2014, the company experienced the following events: 1. 

Purchased inventory that cost $5,700 on account from Bivins Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $520 were paid in cash.

2. 

Returned $350 of the inventory that it had purchased because the inventory was damaged in transit. The seller agreed to pay the return freight cost.

3. Paid the amount due on its account payable to Bivins Company within the cash discount period. 4. Sold inventory that had cost $6,200 for $9,200 on account, under terms 2/10, n/45. 5. 

Received merchandise returned from a customer. The merchandise originally cost $520 and was sold to the customer for $820 cash. The customer was paid $820 cash for the returned merchandise.

6. Delivered goods FOB destination in Event 4. Freight costs of $620 were paid in cash. 7. Collected the amount due on the account receivable within the discount period. 8. 

Took a physical count indicating that $1,900 of inventory was on hand at the end of the accounting period.

 
 

Required a.  Identify these events as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). (Select "NA" if there is no effect on the "Classification".)

 

Problem 3-26 Part b

Required

b.Record each event in a statements model like the   following one. In the Cash Flow column, use OA to designate operating   activity, IA for investment activity, FA for financing activity, NC for net   change in cash and NA to indicate the element is not affected by the event.   The first event is recorded as an example. (Enter   any decreases to account balances and cash outflows with a minus sign.)

 

xercise 3-15 Single-step and multistep income statements LO 3-3

  

The  following information was taken from the accounts of Healthy Eats, a  delicatessen, at December 31, 2014. The accounts are listed in  alphabetical order, and each has a normal balance.

       Accounts payable $ 605       Accounts receivable   405       Advertising expense   200       Cash   415       Common stock   205       Cost of goods sold   600       Interest expense   65       Merchandise inventory   400       Prepaid rent    45       Retained earnings    640       Sales revenue    1,050       Salaries expense   180       Rent expense   100       Loss on sale of land   90       

 Required    

Prepare an income statement for the year using the single-step and multi-step approach. (Loss amounts should be indicated by minus sign.)