a. At the beginning of the period the company had cash of $4,300, inventory of $9,000, contributed capital of $10,000 and retained earning $3,300. b. Denton Company purchased inventory on account from Duke Company under terms 1/10, 1/30. The inventory cost $2,200. The merchandise was delivered under terms FOB shipping point. Freight cost that was paid in cash amounted to $1,100. c. Denton Company returned $200 of the inventory that it had purchased. Duke Company agreed to pay the return freight cost. d. Denton Company paid the amount due on its account payable to Duke Company within the cash discount period. e. Denton Company sold inventory that has cost $3,000 for $5,500. The sale was made on account under terms 2/10,n/45. 1. One of Denton's customers returned merchandise to Denton Company. The merchandise originally cost $400 and was sold to the customer for $710 cash. The customer was paid $710 cash for the returned merchandise. g. Denton Company delivered goods under terms FOB destination. Freight cost that was paid in cash amounted to $60. h. Denton Company collected the amount due on the accounts receivable within the discount period. 1. A physical count indicated that $7,970 of inventory was on hand at the end if the accounting period. Required: (12+2.5+4+1.5) =20 a. Write down the journal entries for the transactions. b. Why the seller offers cash discount to the buyer? Why the buyer accepts the discount offer? Whom does it benefit more? c. Prepare an Income Statement. d. Why the amount of Net Income and the amount of Net Cash Flow from Operating Activity will differ? When they will not differ? Que. 2. Use the following accounts and balances from the Jackson Company to construct an Income Statement, Statement of Cash Flow Statement and Balance Sheet kand $15,000 Insurance Expense 12,000 Distribution 6,500 Prepaid Insurance 40,000 Cash $12,000 Cash Flow From OA 1,500 Beginning Retained Earning 2,500 Beginning Contributed Capital 6,000 Service Revenue 30,000 Cash Flow From FA 23,000 Acquisition From Owners 150 Accumulated Depreciation 850 Cash Flow From IA 2,000 operating Expense 20,000 Accounts Payable 8,000 Supplies 1,500 Supplies Expense Depreciation Expense (20,000) 10,000 Incrunte Daraunhle and affira Fruinment 19 non elins Course search clearning Management System Land $15,000 12,000 Insurance Expense Distribution 6,500 Prepaid Insurance 40,000 Cash 20,000 $12,000 Cash Flow From OA 1,500Beginning Retained Earning 2,500 Beginning Contributed Capital 6,000 Service Revenue 30,000 Cash Flow From FA 23,000 Acquisition from Owners 150 Accumulated Depreciation 850 Cash Flow From IA 2,000 Operating Expense 8,000 office Equipment Accounts Payable 8,000 Supplies 1,500 Supplies Expense Depreciation Expense Accounts Receivable (20,000) 10,000 18,000
