Brief Exercise $3-5($Algo$)$ Effect of inventory shrinkage on the horizontal statements model LO $3-5$

Bridgeport Electronics experienced the following events during Year $1,$ its first year of operation:

Started the business when it acquired $$98,000$ cash from the issue of common stock.

Paid $$83,000$ cash to purchase inventory.

Sold merchandise inventory costing $$34,000$ for $$63,000$ cash. Record this transaction as two separate events $(3$a and $3b).$

Physically counted inventory showing $$42,200$ inventory was on hand at the end of the accounting period.

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.

$\backslash$table$[[\backslash$table$[[$Event$],[$Number$]],$Balance Sheet,Income Statement,$\{$

$\backslash$table$[[$Statement of Cash$],[$Flows$]]\}],[$Assets$,\backslash$table$[[=],[=]],\backslash$table$[[$Liabilities$],[\backslash$table$[[$Accounts$],[$Payable$]]]],+,$Stockholders' Equity,Revenue,$-,$Expenses,$=,\backslash$table$[[$Net$],[$Income$]]],[$Cash$,+,$Inventory,$\backslash$table$[[$Common$],[$Stock$]],+,\backslash$table$[[$Retained$],[$Earnings$]]],[1.,98,000,+,,=,,+,98,000,+,,,-,,=,,98,000,$FA$],[2.,(83,000),+,83,000,=,00,+,00,+,0,00,-,00,=,00,(83,000),$OA$],[3$a$.,00,+,(34,000),=,0,+,0,+,(34,000),00,-,(34,000),=,(34,000),0,$OA$\backslash$times $],[3$b$.,63,000,+,0$vv$,=,0,+,0,+,(29,000)\backslash$times $,63,000,-,0,=,29,000\backslash$times $,63,000,$OA$],[4.,00,+,1,800\backslash$times $,=,00,+,00,+,42,200\backslash$times $,02,-,0\backslash$times $,=,0\backslash$times $,00,],[$Total$,78,000,+,50,800,=,0,+,98,000,+,(20,800),63,000,-,(34,000),=,(5,000),78,000,$NC$^(**)]]$Brief Exercise $3-5($Algo$)$ Effect of inventory shrinkage on the horizontal statements model LO $3-5$

Bridgeport Electronics experienced the following events during Year $1,$ its first year of operation:

Started the business when it acquired $$98,000$ cash from the issue of common stock.

Paid $$83,000$ cash to purchase inventory.

Sold merchandise inventory costing $$34,000$ for $$63,000$ cash. Record this transaction as two separate events $(3$a and $3b).$

Physically counted inventory showing $$42,200$ inventory was on hand at the end of the accounting period.

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.

$\backslash$table$[[\backslash$table$[[$Event$],[$Number$]],$Balance Sheet,Income Statement,$\{$

$\backslash$table$[[$Statement of Cash$],[$Flows$]]\}],[$Assets$,\backslash$table$[[=],[=]],\backslash$table$[[$Liabilities$],[\backslash$table$[[$Accounts$],[$Payable$]]]],+,$Stockholders' Equity,Revenue,$-,$Expenses,$=,\backslash$table$[[$Net$],[$Income$]]],[$Cash$,+,$Inventory,$\backslash$table$[[$Common$],[$Stock$]],+,\backslash$table$[[$Retained$],[$Earnings$]]],[1.,98,000,+,,=,,+,98,000,+,,,-,,=,,98,000,$FA$],[2.,(83,000),+,83,000,=,00,+,00,+,0,00,-,00,=,00,(83,000),$OA$],[3$a$.,00,+,(34,000),=,0,+,0,+,(34,000),00,-,(34,000),=,(34,000),0,$OA$\backslash$times $],[3$b$.,63,000,+,0$vv$,=,0,+,0,+,(29,000)\backslash$times $,63,000,-,0,=,29,000\backslash$times $,63,000,$OA$],[4.,00,+,1,800\backslash$times $,=,00,+,00,+,42,200\backslash$times $,02,-,0\backslash$times $,=,0\backslash$times $,00,],[$Total$,78,000,+,50,800,=,0,+,98,000,+,(20,800),63,000,-,(34,000),=,(5,000),78,000,$NC$^(**)]]$