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Brief Exercise 3 - 1 ( Algo ) Effect of inventory transactions on financial statements: Perpetual system LO 3 - 1 Lucile Xi started a
Brief Exercise Algo Effect of inventory transactions on financial statements: Perpetual system LO
Lucile Xi started a new outdoor clothing company in Year The business experienced the following events during its first year of operation. Assume the new company uses the perpetual inventory system.
Acquired $ cash from the issue of common stock.
Purchased clothing merchandise for $ cash.
Sold clothing costing $ for $ cash. Record this transaction as two separate events a and b
Required:
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 The first transaction is shown as an example.
Note: Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank if no input is needed.
Answer is complete but not entirely correct.
tabletableEventNumberBalance Sheet,Income Statement,
tableStatement of CashFlowsAssetstabletableLiabilitiesAccountsPayableStockholders' Equity,Revenue,Expenses,tableNetIncomeCashInventory,tableCommonStocktableRetainedEarningsFAvvvvvvvvvvvvtimes OAatimes times vvvvtimes times times times OAbtimes times vvtimes vvtimes times TotalNC
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