Katies Dress Supply (KDS), a garment wholesaler, experienced the following events in Year 1, its first year of operations. KDS uses the perpetual inventory method.

1. KDS was started when it issued common stock for $60,000 cash.
2. KDS purchased land for cash for $8,000.
3. KDS purchased on account inventory with a list price of $54,000. Payment terms were 2/10, n/30. KDS records inventory transactions at the gross amount.
4. The transportation terms for the merchandise delivered in event No. 3 were FOB shipping point. KDS paid the transportation cost of $800 in cash.
5. An inspection revealed that merchandise with a purchase price of $4,000 from event No. 3 was defective. KDS returned this merchandise to its supplier for credit.
6. a. KDS recognizes the discount for $30,000 of the inventory purchased in event No. 3.

b. KDS paid this portion of accounts payable.

1. a. KDS sold inventory to various retail store customers on account. KDS offers customers payment terms of 1/15, n/30. The list price for the sales was $68,000.

b. Recognized the cost of the inventory sold was $42,140.

1. a. Customers returned some goods KDS had sold in event No. 6. The goods had been sold for a list price of $4,000. The items are not defective and can be sold as is.

b. These goods had a cost of $2,940.

1. KDS paid in cash transportation cost of $1,200 for goods delivered to customers FOB destination.
2. a. Receivables recorded at a gross price of $50,000 were paid within the 15-day discount period. KDS recognized the sales discount.

b. KDS collected cash from these customers.

1. KDS paid $9,600 in cash for other operating expenses.
2. KDS sold the land from transaction 2 for $12,000.
3. KDS paid dividends of $5,000 for the year.