Assets DAN WATSON MERCHANDISING Effect of Events on Financial Statement Stockholders' Equity Common Retained Revenue - Expenses = Stock " Earnings Event Net Income Statement of Cash Flows Cash + Inventory = 1. + + 2. + + 3a. + + 3b. + + Total + 0= CO+ C00-L + DAN WATSON MERCHANDISING Income Statement For the Year Ended December 31, 2018 Operating expenses Total assets Required information [The following information applies to the questions displayed below.] The beginning account balances for Terry's Auto Shop as of January 1, 2018, follows: Account Titles Cash Inventory Common Stock Retained Earnings Beginning Balances $6,090 3,190 7,470 1,810 The following events affected the company during the 2018 accounting period: 1. Purchased merchandise on account that cost $4,280. 2. The goods in Event 1 were purchased FOB shipping point with freight cost of $205 cash. 3. Returned $435 of damaged merchandise for credit on account. 4. Agreed to keep other damaged merchandise for which the company received an $205 allowance. 5. Sold merchandise that cost $2,650 for $4,880 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $190 cash. 7. Paid $2,810 on the merchandise purchased in Event 1. Required a. Organize appropriate ledger accounts under an accounting equation. Record the beginning balances and the transaction data in the accounts. In the last column of the table, provide appropriate account titles for the Retained Earnings amounts. (Enter any decreases to account balances with a minus sign. If there is no effect on the Accounts Titles for Retained Earnings, leave the cell blank. Not every cell will require entry.) TERRY'S AUTO SHOP Assets Events Cas + Inventory Effect of Events on the Financial Statements = Liabilities + Stockholders' Equity Accounts Common , Retained Stock Earnings 3,1901 7,470 + 1,810 4,280 = 4,280 = Payable Accounts Titles for Retained Earnings Beg. Bal. 6,090| + + + 1. + + + (205) + + + + + + + + + + + + + + + + + + 7. + + End Bal. 5,885 + 7,470 = 4,280| + 7,470 + 1,810 + +