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 $18,000 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 $620 were paid in cash by the responsible party. 3. Returned $500 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. (o) Recognized $23,000 of cash revenue from the sale of merchandise. (b) Recognized $17,000 of cost of goods sold. 6. The merchandise in Event 5 a was sold to customers FOB destination. Freight costs of $970 were pald in cash by the responsible party. 7. Pald cash of $4,200 for selling and administrative expenses. 8. Sold the land for $7,800 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 22 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. Record these transactions in a financial statements model, (In the Cash Fiow column, use the initials OA to designate operating activity, iA for investing activity, FA for decreases to account balances with a minus sign, Not all celis reguire input. If there is no effect on the Account Titles for Statement of Cash Flows, leave the ceil blank. Complete this question by entering your answers in the tabs below. Prepare a schedule of cost of goods sold (Appendix). Complete this question by entering your answers in the tabs below. Prepare a multistep income statement. Include common size percentages on the income statement. (Round percentage answers to 1 decimal place.) 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 22 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. d. ASC's gross margin percentage in Year 1 was 22 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
