Academy Sales Company $($ASC$)$ started the Year $2$ accounting period with the balances given in the financial statements model shown Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, recc

of Cash Flows column, classify the cash flows as operating activities $($OA$),$ investing activities $($IA$),$ or financing activities $($FA$).$

Note: Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank if no input is needed. Complete this question by entering your answers in the tabs below.

Req A

Req B

Req C

Req $D$ and $E$

Prepare a schedule of cost of goods sold $($Appendix$).$ Req B

Req C

Req $D$ and $E$

Prepare a multistep income statement. Include common size percentages on the income statement.

Note: Round percentage answers to $1$ decimal place.Complete this question by entering your answers in the tabs below.

Req $D$ and $E$

d$.$ ASC's gross margin percentage in Year $1$ was $20$ percent. Based on the common size data in the income statement, did

ASC raise or lower its prices in Year $2($Appendix$)?$

e$.$ Assuming a $10$ percent rate of growth, what is the amount of net income expected for Year $3?$

d$.$ Sales prices

e$.$ Net income

as follows. During Year $2,$ ASC experienced the following business events:

Purchased $$24,000$ of merchandise inventory on account, terms $\frac{2}{10},\frac{n}{30}.$

The goods that were purchased in Event $1$ were delivered FOB shipping point. Freight costs of $$680$ were paid in cash by the

responsible party.

Returned $$500$ of goods purchased in Event $1.$

$($a$)$ Recorded the cash discount on the goods purchased in Event $1.$

$($b$)$ Paid the balance due on the accounts payable within the discount period.

$($a$)$ Recognized $$30,000$ of cash revenue from the sale of merchandise.

$($b$)$ Recognized $$23,000$ of cost of goods sold.

The merchandise in Event $5$a was sold to customers FOB destination. Freight costs of $$1,030$ were paid in cash by the responsible

party.

Paid cash of $$4,800$ for selling and administrative expenses.

Sold the land for $$7,800$ cash.

Required:

a$.$ Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of

cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify

the cash flows as operating activities $($OA$),$ investing activities $($IA$),$ or financing activities $($FA$).$

b$.$ Prepare a schedule of cost of goods sold $($Appendix$).$

c$.$ Prepare a multistep income statement. Include common size percentages on the income statement.

d$.$ ASC's gross margin percentage in Year $1$ was $20$ percent. Based on the common size data in the income statement, did ASC raise

or lower its prices in Year $2($Appendix$)?$

e$.$ Assuming a $10$ percent rate of growth, what is the amount of net income expected for Year $3?$