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A B Company (ABC) started the 2019 (Second Year of business) accounting period with the following balances: Cash 25,000, Inventory 3,000, Land 5,000, Common Stock
A B Company (ABC) started the 2019 (Second Year of business) accounting period with the following balances: Cash 25,000, Inventory 3,000, Land 5,000, Common Stock 18,000 and Retained Earnings 15,000. During 2019, ABC experienced the following business events:
1. Purchased $16,000 of merchandise inventory on account, terms 2/10, n/30.
2. The goods that were purchased in Event 1 were delivered FOB shipping point. Freight costs of $600 were paid in cash by the responsible party.
3. Returned $500 of good purchased in Event 1.
4. Recorded the cash discount on the goods purchased in Event 1.
5. Paid the balance due on the accounts payable within the discount period.
6. Recognized $21,000 of cash revenue from the sale of merchandise.
7. Recognized $15,000 of cost of goods sold.
8. The merchandise sold in Event 6 was sold to customers FOB destination. Freight costs of $950 were paid in cash by the responsible party.
9. Paid cash of $4,000 for selling and administrative expenses.
10. Sold the land for $5,600 cash
Required:
A. Record the above transactions in a financial statement
B. Prepare a schedule of cost of goods sold
C. Prepare a multistep income statement
in standard accounting statement formatting. photo from textbook for reference.
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