During 2020, the company experienced the following events Purchased merchandise on account for $580,000 Sold merchandise that cost $420,000 for $890,000 on account Sold for $245,000 cash merchandise that had cost $160,000 Sold merchandise for $190,000 to credit card customers The merchandise had cost $96,000 The credit company charged 4 percent fee and transferred the balance to Redds bank account Collected $620,000 cash from accounts receivable Paid $610,000 cash on accounts payable Paid $145,000 cash for selling and administrative expenses Loaned $60,000 to J Parks The note had an 8 percent interest rate and one year term to maturity Wrote off $7,500 of accounts receivable On January 1, 2020, purchased equipment for $100,000 cash The equipment was estimated to have a five year life and was to be depreciated at a rate of $20,000 a year Uncollectible accounts expense was estimated at 1 percent of sales on account Recorded seven months of accrued interest on the note at December 31, 2020 Recorded depreciation expense for 2020 Required Record each event in a horizontal statements model Prepare a multistep income statement (common size it as well), a statement of retained earnings, a classified balance sheet and a statement of cash flows Assets Liabilities Current Longterm Current Longterm Stockholders' Equity Income Statement Statement of Cash Flows Activity Cash Flow Type Unearned Revenue Cash Accts Rec Inventory Supplies Land Accts Pay Salaries Pay Notes Payable Common Stock Ret Earnings Revenue Expenses Net Inc (Loss) Assets Liabilities Current Longterm Current Longterm Stockholders' Equity Income Statement Statement of Cash Flows Activity Cash Flow Type Unearned Revenue Cash Accts Rec Inventory Supplies Land Accts Pay Salaries Pay Notes Payable Common Stock Ret Earnings Revenue Expenses Net Inc (Loss)

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Posted on Jul 11, 2024

During 2020, the company experienced the following events: Purchased merchandise on account for $580,000. Sold merchandise that cost $420,000 for $890,000 on account. Sold for

During 2020, the company experienced the following events:

Purchased merchandise on account for $580,000.
Sold merchandise that cost $420,000 for $890,000 on account.
Sold for $245,000 cash merchandise that had cost $160,000.
Sold merchandise for $190,000 to credit card customers. The merchandise had cost $96,000. The credit company charged 4 percent fee and transferred the balance to Redds bank account.
Collected $620,000 cash from accounts receivable.
Paid $610,000 cash on accounts payable.
Paid $145,000 cash for selling and administrative expenses.
Loaned $60,000 to J. Parks. The note had an 8 percent interest rate and one-year term to maturity.
Wrote off $7,500 of accounts receivable.
On January 1, 2020, purchased equipment for $100,000 cash. The equipment was estimated to have a five-year life and was to be depreciated at a rate of $20,000 a year.
Uncollectible accounts expense was estimated at 1 percent of sales on account.
Recorded seven months of accrued interest on the note at December 31, 2020.
Recorded depreciation expense for 2020.

Required:

Record each event in a horizontal statements model.
Prepare a multistep income statement (common size it as well), a statement of retained earnings, a classified balance sheet and a statement of cash flows.

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Assets Liabilities Current Longterm Current Longterm Stockholders' Equity Income Statement Statement of Cash Flows Activity Cash Flow Type Unearned Revenue Cash Accts Rec Inventory Supplies Land Accts Pay Salaries Pay Notes Payable Common Stock Ret Earnings Revenue Expenses Net Inc (Loss) Assets Liabilities Current Longterm Current Longterm Stockholders' Equity Income Statement Statement of Cash Flows Activity Cash Flow Type Unearned Revenue Cash Accts Rec Inventory Supplies Land Accts Pay Salaries Pay Notes Payable Common Stock Ret Earnings Revenue Expenses Net Inc (Loss)