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Lisa's Dress Supply ( LDS ) , a garment wholesaler, experienced the following events in Year 1 , its first year of operations. LDS uses

Lisa's Dress Supply (LDS), a garment wholesaler, experienced the following events in Year 1, its first year of
operations. LDS uses the perpetual inventory method.
LDS was started when it issued common stock for $60,000 cash.
LDS purchased on account inventory with a list price of $54,000. Payment terms were 210,n30. LDS
records inventory transactions at the gross amount.
The freight terms for the merchandise delivered in Event No.2 were FOB shipping point. LDS paid the
freight cost of $1,000 in cash.
An inspection revealed that merchandise with a list price of $4,000 purchased in Event No.2 was
defective. LDS returned this merchandise to its supplier for credit.
LDS paid within the discount period for the inventory purchased in Event No.2.
LDS sold inventory to various retail store customers on account. LDS offers customers payment terms
of 115,n30. The list price for the sales was $68,000. The cost of the inventory sold was $42,140.
Customers returned some goods LDS had sold in Event No.6. The goods had been sold for a list price
of $4,000 and had a cost of $2,940.
LDS paid in cash freight cost of $1,200 for goods delivered to customers FOB destination.
LDS collected cash from customers who paid off accounts receivable with a list price of $50,000 within
the 15-day discount period.
LDS paid $9,600 in cash for other operating expenses.
Complete Practice Problem #2
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