Junker's Stash started the Year 2 accounting period with the balances given in the financial statements model shown below. During Year 2, Junker's Stash experienced the following business events: 1. Paid cash to purchase $89,000 of merchandise inventory. 2. The goods that were purchased in Event 1 were delivered FOB destination. Freight costs of $1,780 were paid in cash by the responsible party. 3a. Sold merchandise for $100,500 under terms 1/10, n/30. 3b. Recognized $51,400 of cost of goods sold. 4a. Junker's Stash customers returned merchandise that was sold for $2,480. 4b. The merchandise returned in Event 4a had cost Junker's Stash $1,440. 5. The merchandise in Event 3a was sold to customers FOB destination. Freight costs of $1,840 were paid in cash by the responsible party. 6a. The customers paid for the merchandise sold in Event 3a within the discount period. Recognized the sales discount. 6b. Collected the balance in the accounts receivable account. 7. Paid cash of $7,325 for selling and administrative expenses. 8. Sold the land for $10,050 cash. Required a. Record the above transactions in a financial statements model. The first event is recorded as an example. b. Determine the amount of net sales. c. Prepare a multistep income statement. Include common size percentages on the income statement. d. The return-on-sales ratio for Junker's Stash during the prior year was 12 percent. Based on the common size data in the income statement, did the expenses for Junker's Stash increase or decrease in Year 2? Record the above transactions in a financial statements model. The first event is recorded as an example. (In the Cash Flow column, use OA to designate operating activit activity, NC for net change in cash and NA to indicate the element is not affected by the event. Enter any decreases to account balances and cash outflows with a minus s JUNKER'S STASH Financial Statements Model Balance Sheet Income Statement Expensel = Net Income Loss Assets Stockholders' Equity Revenuel Gain Statement of Cash Flow Event No. Cash + Accounts Receivable + Inventory + Land Common Stock + Retained Earnings 41,700 Beg. bal. 99,000 + + 16,900 + 14,800 = 89,000 + NA 1. + + 2. + + + + + + + . + + 3b. + + = 4a. + + + + + 4b. + + + + + + 5. + + 6a. . + +++++ 6b. + + 7. | + + + + + + + = 8 + + + End. bal. 99,000 + 16,900 + 14,800 = 89,000 + 41,700 0 0 = 0 0 Determine the amount of net sales. (Round your answer to 1 decimal place.) Net sales JUNKER'S STASH Income Statement For the Year Ended December 31, Year 2 % % 0.0 0.0 % Operating expenses % % Total operating expenses 0.0 0.0 % 0.0 0.0 % Non-operating items % $ 0.0 0.0 % The return-on-sales ratio for Junker's Stash during the prior year was 12 percent. Based on the common size data in the income statement, did the expenses for Junker's Stash increase or decrease in Year 2? The expenses for Junker's Stash increase or decrease in Year 2
