During Year 1, Cowboy Ice Cream Company (CIC) purchased $24,000 of inventory on account. CIC sold inventory on account that cost $18,000 for $27,000. Cash payments on accounts payable were $15,000. There was $24,000 cash collected from accounts receivable. CIC also paid $4,400 cash for operating expenses. Assume that CIC started the accounting period with $20,000 in both cash and common stock.

Required

1. Record the events in a horizontal statement model. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, or NC for net change in cash. If the element is not affected by the event, leave the cell blank.

2. What is the balance of accounts receivable at the end of Year 1?

3. What is the balance of accounts payable at the end of Year 1?

4. What are the amounts of gross margin and net income for Year 1?

5. Determine the amount of net cash flow from operating activities.

Record the events in a horizontal statement model. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, or NC for net change in cash. If the element is not affected by the event, leave the cell blank. (Not every cell will require entry. Enter any decreases to account balances and cash outflows with a minus sign.)

Balance Sheet

Income Statement

Event

Assets

Liabilities

Stockholders' Equity

Cash

+

Accounts Receivable

+

Inventory

=

Accounts Payable

+

Common Stock

+

Retained Earnings

Revenue

-

Expenses

=

Net Income

Statement of Cash Flows

Beg Bal

20000

+

1

+

2

+

3

+

4

+

5

+

End Bal.

b	Accounts Receivable
c	Accounts Payable
d	Gross Margin
	Net Income
e	Net Cash Flow From Operating Activities