New England Sales had the following transactions in 2013: 1. The business was started when it acquired

Question:

New England Sales had the following transactions in 2013:
1. The business was started when it acquired $300,000 cash from the issue of common stock.
2. New England purchased $900,000 of merchandise for cash in 2013.
3. During the year, the company sold merchandise for $1,500,000. The merchandise cost $820,000. Sales were made under the following terms:
a. $530,000...Cash sales
b. 450,000..Credit card sales (The credit card company charges a 4 percent service fee.)
c. 520,000...Sales on account
4. The company collected all the amount receivable from the credit card company.
5. The company collected $480,000 of The company paid $215,000 cash for selling and administrative expenses.
7. Determined that 5 percent of the ending balance would be uncollectible.

Required
a. Show the effects of each of the transactions on the elements of the financial statements, using a horizontal statements model like the one shown here. Use + for increase, €“ for decrease, and NA for not affected. The first transaction is entered as an example.

b. Prepare general journal entries for each of the transactions, and post them to T-accounts.
c. Prepare an income statement, statement of changes in stockholders€™ equity, balance sheet, and statement of cash flows for2013.

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...