During 2016, Hardy Merchandising Company purchased $40,000 of inventory on account. Hardy sold inventory on account that

Question:

During 2016, Hardy Merchandising Company purchased $40,000 of inventory on account. Hardy sold inventory on account that cost $24,500 for $38,000. Cash payments on accounts payable were $22,000. There was $26,000 cash collected from accounts receivable. Hardy also paid $5,100 cash for operating expenses. Assume that Hardy started the accounting period with $20,000 in both cash and common stock.

Required

a. Identify the events described in the preceding paragraph and record them in a horizontal statements model like the following one:

During 2016, Hardy Merchandising Company purchased $40,000 of inventory on

b. What is the balance of accounts receivable at the end of 2016?
c. What is the balance of accounts payable at the end of 2016?
d. What are the amounts of gross margin and net income for 2016?
e. Determine the amount of net cash flow from operating activities.
f. Explain why net income and retained earnings are the same for Hardy. Normally would these amounts be the same? Why or why not?

Accounts Payable
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... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...