Exercise 4-11A (Algo) Effect of inventory losses: Perpetual system LO 4-5

Ho Designs experienced the following events during Year 1, its first year of operation:

1. Started the business when it acquired $52,000 cash from the issue of common stock.
2. Paid $21,400 cash to purchase inventory.
3. Sold inventory costing $12,200 for $27,500 cash.
4. Physically counted inventory; had inventory of $7,700 on hand at the end of the accounting period.

Required a. Record the events in the T-accounts provided. b. Prepare an income statement and balance sheet.

Complete this question by entering your answers in the tabs below.

• Req A
• Req B Income Statement
• Req B Balance Sheet

Prepare an income statement.

HO DESIGNS
Income Statement
For the Year Ended December 31, Year 1
	0
	$ 0

• Req A
• Req B Balance Sheet