Campus Computers was started in 2012. The company experienced the following accounting events during its first year
Question:
Campus Computers was started in 2012. The company experienced the following accounting events during its first year of operation.
1. Started business when it acquired $50,000 cash from the issue of common stock.
2. Purchased merchandise with a list price of $46,000 on account, terms 2/10, n/30.
3. Paid off one-half of the accounts payable balance within the discount period.
4. Sold merchandise on account that had a list price of $48,000. Credit terms were 1/20, n/30. The merchandise had cost Campus Computers $28,000.
5. Collected cash from the account receivable within the discount period.
6. Paid $7,200 cash for operating expenses.
7. Paid the balance due on accounts payable. The payment was not made within the discount period.
Required
a. Record the events in a horizontal statements model like the following one.
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b. What is the amount of gross margin for the period? What is the net income for the period?
c. Why would Campus Computers sell merchandise with the terms 1/20, n/30?
d. What do the terms 2/10, n/30 in Event 2 mean to CampusComputers?
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...
Step by Step Answer:
a Campus Computers Horizontal Statements Model for 2012 Assets Liab Stkholders Equity Income Stateme...View the full answer
Survey of Accounting
ISBN: 978-0078110856
3rd Edition
Authors: Thomas P. Edmonds, Frances M. McNair, Philip R. Olds, Bor Yi
