9 lds collected cash from customers who paid off

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9. LDS collected cash from customers who paid off accounts receivable with a list price of $50,000 within the 15-day discount period. Customer took 1% (500) paid 49,500 10. LDS paid $9,600 in cash for other operating expenses. Required Record the events under an accounting equation, and prepare an income statement, a balance sheet, and a statement of cash flows. 3-8
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Chapter 03 - Accounting for Merchandising Businesses Demonstration Problem 3-2: Work Paper, Accounting Equation 2011 Cash + Acct. Rec. + Inv. = Acct. Pay. + Com. Stock + Ret. Ear. Beginning Balances $ -0- $ -0- $ -0- $ -0- $ -0- $ -0- (1) Common Stock Issue +60,000 +60,000 (2) Inventory Purchase Discount +54,000 -1,080 +54,000 -1,080 (3) Transportation-in -1,000 +1,000 (4) Purchase Return -3,920 -3,920 (5) Pay Acct. Payable -49,000 -49,000 (6a) Sale of Inventory Sales Discount 68,000 -680 68,000 s -680 s (6b) Cost of Goods Sold -42,140 -42,140 c (7a) Sales Return -3,960 -3,960 s (7b) Cost of Goods Sold 2,940 2,940 c (8) Transportation-out -1,200 -1,200 ex (9) Collect Acct. Rec. +49,500 -49,500 (10) Other Oper. Exp. -9,600 -9,600 ex −−−−− −−−−− −−−−− −−−−− −−−−− −−−−− Ending Balances $48,700 $13,860 $10,800 $ -0- $60,000 $13,360 ════ ════ ═════ ════ ═════ ═════ 3-9
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Chapter 03 - Accounting for Merchandising Businesses Demonstration Problem 3-2: Work Paper, Financial Statements Lisa’s Dress Shop Financial Statements Income Statement For the Year Ended December 31, 2011 Sales Less returns Less discount Net sales 68,000 3,960 -680 63,360 Cost of Goods Sold (Product Cost) -39,200 Gross Margin $24,160 Transportation-out (Period Cost) -1,200 Other Operating Expenses (Period Cost) -9,600 Net Income $13,360 Balance Sheet at December 31 Assets Cash 48,700 Accounts Receivable 13,860 Inventory 10,800 Total Assets 73,360 Stockholders’ Equity Common Stock $60,000 Retained Earnings 13,360 Total Stockholders’ Equity $73,360 Statement of Cash Flows Net Cash Flow from Operating Activities 1 Net Cash Flow from Investing Activities Net Cash Flow from Financing Activities Net Change in Cash $48,700 Beginning Cash Balance Ending Cash Balance Beginning retained earnings (new) 0 Add net income +13,360 Less dividends -0 Ending retained earnings 13,360 3-10
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Chapter 03 - Accounting for Merchandising Businesses 1 The net cash flow from operating activities consists of an inflow from revenue less outflows for transportation-in, payments of accounts payable, transportation-out, and other operating expenses. 3-11
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