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 $33,000 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 $770 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 $40,000 of cash revenue from the sale of merchandise (b) Recognized $32,000 of cost of goods sold. 6. The merchandise in Event 5a was sold to customers FOB destination. Freight costs of $1120 were paid in cash by the responsible party 7. Pald cash of $5.700 for selling and administrative expenses. 8. Sold the land for $11,500 cash. Required a. Record these transactions in a financial statements model, b. Prepare a schedule of cost of goods sold (Appendix) c. Propare a multistep income statement. Include common size percentages on the income statement d. ASC's gross margin percentage in Year 1 was 18 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. RA Rega Regc Red and Record these transactions in a financial statements model in the Cash Flow column, use the initial D to designate operating activity, IA for investing activity, FA for finan decreases to account balances with a minussion Not all cells require input. If there is no effect on the Account Titles for Statement of Cash Flows, leave the cell blank.) ACADEMY SALES COMPANY Financial Statement Model Event No Assets Income Statement Gush| Statement of Cash Flow + Inventory Balance Sheet Liabilities Accounts Payable 10.000 O. Land Stockholders' Equity Common Retained Stock Eaming 35 000 - 35,000 Rovina/ Expense Net Income Bal 48000 3,000 - 1 . 2 3 40 4b . 50 5 7 Total Re> Complete this question by entering your answers in the tabs below. Reg A Reg Rego Reg D and E Prepare a schedule of cost of goods sold (Appendix). ACADEMY SALES COMPANY Schedule of Cost of Goods Sold For the Period Ended December 31, Year 2 Beginning inventory Goods available for sale Cost of goods sold ( Req A Reqc > Complete this question by entering your answers in the tabs below. Reg A Reg 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.) ACADEMY SALES COMPANY Income Statement For the Period Ended December 31, Year 2 % Less: Operating expenses Nonoperating items Complete this question by entering your answers in the tabs below. Red A Reg B Reqc Reg D and E d. ASC's gross margin percentage in Year 1 was 18 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 e
