Sans Company began the 2010 accounting period with $18,000 cash, $60,000 inventory, $50,000 common stock, and $28,000
Question:
Sans Company began the 2010 accounting period with $18,000 cash, $60,000 inventory, $50,000 common stock, and $28,000 retained earnings. During the 2010 accounting period, Sans experienced the following events.
1. Sold merchandise costing $38,200 for $74,500 on account to Hughes's General Store.
2. Delivered the goods to Hughes under terms FOB destination. Freight costs were $400 cash.
3. Received returned goods from Hughes. The goods cost Sans $2,000 and were sold to Hughes for $3,800.
4. Granted Hughes a $1,000 allowance for damaged goods that Hughes agreed to keep.
5. Collected partial payment of $52,000 cash from accounts receivable.
Required
a. Record the events in a statements model like the one shown below.
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b. Prepare an income statement, balance sheet, and statement of cash flows.
c. Why would Sans grant the $2,000 allowance to Hughes? Who benefitsmore?
Step by Step Answer:
a Sans Company Effect of Events on the Financial Statements Assets Equity Rev Exp Net Inc Cash Flow No Cash A Rec Inv C Stock Ret Earn Bal 18000 NA 60...View the full answer
