Comprehensive accounting cycle problem (uses percent of revenue allowance method) The following trial balance was prepared for Tile, Etc., Inc. on December 31, Year 2, after all account adjustments had been made: Account Title

Cash $ 110,000 Accounts Receivable 125,000 Allowance for Doubtful Accounts 18,000 Inventory 425,000 Accounts Payable 95,000 Common Stock 450,000 Retained Earnings 97,000 Tile, Etc. had the following transactions in Year 3: 1.Purchased merchandise on account for $580,000. 2. Sold merchandise that cost $420,000 for $890,000 on account. 3.Sold for $245,000 cash merchandise that had cost $160,000. 4.Sold merchandise for $190,000 to credit card customers. The merchandise had cost $96,000. The credit card company charges a 4 percent fee. 5.Collected $620,000 cash from accounts receivable. 6.Paid $610,000 cash on accounts payable. 7.Paid $145,000 cash for selling and administrative expenses. 8.Collected cash for the full amount due from the credit card company (see item 4). 9.Loaned $60,000 to J. Parks. The note had an 8 percent interest rate and a one-year term to maturity. 10. Wrote off $7,500 of accounts as uncollectible. 11. Made the following adjusting entries: (a) 1. Recorded uncollectible accounts expense estimated at 1 percent of sales on account. (b) 2. Recorded seven months of accrued interest on the note at December 31, Year 3 (see item 9). Required A. Organize the transaction data in accounts under an accounting equation. B. Prepare an income statement, a statement of changes in stockholders equity, a balance sheet, and a statement of cash flows for Year 3.

For part (A), I need the Effect if transactions of the Financial Statements.

For Part (B), I use the income statments, the stock Changes in stockholders equity, the balance sheet, and the statement of cash flows. Please use the templates provided to asnwer part B. Part A (Effect of transactions)

Income Statement

Stockholders Equity

Balance sheet

Statement of cash flows

Requirement a NORTHWEST SALES Effect of Transactions on Financial Statements Assets Liabilities Equity Revenue Expenses - Net Income Event 2016 Cash Flows 1 NA NA + NA NA NA FA 2 32 3b. 3c. 3d 4 5 6 Requirement b. NORTHWEST SALES Income Statement For the Year Ended Year 1 Sales Revenue Cost of Goods Sold Gross Margin Operating Expenses Credit Card Expense Selling and Administrative Expenses Uncollectible Accounts Expense Total Operating Expenses Net Income NORTHWEST SALES Statement of Changes in Stockholders 'Equity For the Year Ended Year 1 2 3 3 5 5 Beginning Common Stock Plus: Stock Issued Ending Common Stock Beginning Retained Earnings Plus: Net Income Ending Retained Earnings Total Stockholders' Equity 8 9 NORTHWEST SALES Balance Sheet As of December 31, Year 1 . 5 5 7 m Assets Cash Accounts Receivable Less: Allowance for Doubtful Accounts Merchandise Inventory Total Assets 2 3 5 6 Liabilities Stockholders' Equity Common Stock Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity Z 68 59 90 NORTHWEST SALES Statement of Cash Flows For the Year Ended December 31, Year 1 Cash Flows from Operating Activities: Inflow from Customers Outflow for Inventory Outflow for Expenses Net Cash Flow for Operating Expenses Cash Flows from Investing Activities 5 5 Cash Flows from Financing Activities: Inflow from Stock Issued Net Cash Flow from Financing Activities 7 8 39 20 Net Change in Cash Plus: Beginning Cash Balance Ending Cash Balance