Demonstration_Problems_for_Chapter_5_solution

Demonstration_Problems_for_Chapter_5_solution -...

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Demonstration Problems for Chapter 5 Demonstration Problem 5-1 Inventory Purchase/Sale, Perpetual Method The following events pertain to Jefferson Hardware Store. Jefferson uses the perpetual inventory method. 1. Jefferson Hardware was started on January 1, 2003 when it acquired $5,000 cash by issuing common stock. 2. The store paid $4,500 cash to purchase inventory. 3. Jefferson sold for $6,000 cash inventory that cost $3,500. 4. During 2003, the store paid $2,000 cash for operating expenses. Required Record the events in a financial statements model. Prepare a formal income statement and a balance sheet. 69
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Demonstration Problem 5-2 Perpetual Inventory Transactions Lisa’s Dress Shop (LDS) experienced the following events in 2004, its first year of operations. The dress shop uses the perpetual inventory method. 1. LDS was started when it issued common stock for $60,000 cash. 2. LDS purchased on account inventory with a list price of $54,000. Payment terms were 2/10, n/30. LDS records inventory transactions at the net amount. 3. The freight terms for the merchandise delivered in Event No. 2 were FOB shipping point. LDS paid the freight cost of $1,000 in cash. 4.
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