Academy Sales Company (ASC) started the Year 2 accounting period with the balances given in the financial statements model shown as follows. During Year 2. ASC experienced the following business events: 1. Purchased $26,000 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 $700 were paid in cash by the responsible party 3. Returned $1,000 of goods purchased in Event 1. 4. (a) Recorded the cash discount on the goods purchased in Event 1 (b) Paid the balance due on the account payable within the discount period. 5. (a) Recognized $33,000 of cash revenue from the sale of merchandise (b) Recognized $25,000 of cost of goods sold 6. The merchandise in Event So was sold to customers FOB destination. Freight costs of $1,050 were paid in cash by the responsible party 7. Pald cash of $5,000 for selling and administrative expenses. 8. Sold the land for $10,700 cash. Required a. Record these transactions in a financial statements model 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? Complete this question by entering your answers in the tabs below. lows, leave the cell blank) ACADEMY SALES COMPANY Financial Statements Model vent No. Assets Income Statement Cash Statement of Cash Flow Balance Sheet Liabilities Land Accounts Payable 10.000 = 0 28,000 Stockholders' Equity Common Retained Stock Earnings 28.000 + 25,000 Revenue Gain Expense Net Income 35,000 + Inventory 8.000 - 26,000 + Bal 1 . 2 (700) - . 700/= (700) 3 40 (1.000) (700) OA (1.000) (520) (24.480) 520 520 45 (24480) - 33.000 33.000 (24,480) COA 33,000 O (25,000) Ba 5b 6. 7 . (1.050) (5,000) 10.700 - 47.470 + 25,000 1.050 5.000 = 33.000 (25,000) (1.050) (5.000) 700 (10,000) - 0 (1,050) OA (5.000) OA 10.700 FA 12.470 NC Totals 8.000 0 700 34.220 28.000 + 25,000 31.750 2.470 ReqB > Complete this question by entering your answers in the tabs below. 3 Req A Req B Reqc Reg D and E Prepare a schedule of cost of goods sold (Appendix). Print ACADEMY SALES COMPANY Schedule of Cost of Goods Sold For the Period Ended December 31, Year 2 Beginning inventory $ 8,000 Plus: Purchases Less: Purchase returns and allowances 26,000 (1,000) Goods available for sale Less: Purchases discounts Cost of goods sold 31,200 (520) 30,680 3 Req A Req B Reqc Reg D and E Prepare a multistep income statement. Include common size percentages on the income statement. (Round percentage answers to 1 decimal place.) Print ACADEMY SALES COMPANY Income Statement For the Period Ended December 31, Year 2 Net sales 33,000 Cost of goods sold 25,000 8,000 Less: Operating expenses 100.0 % (75.8) 24.2 5,000 15.0 Selling and administrative expense Transportation in Operating income Nonoperating items Gain on the sale of land 3,000 9.2 700 3,700 2.1 11,3 a. Record these transactions in a financial statements model. 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 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? Complete this question by entering your answers in the tabs below. Req A Req B Reqc Reg 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 Net income