please explain
The following listing of accounts pertains to Benji's Grocery as of January 1, Year 2: Beginning Account Title Balances Cash $23,800 Accounts receivable 3,400 Merchandise inventoryr 44,000 Accounts payable 3,400 Common stock 33,000 Retained earnings 30,800 The following events occurred in Year 2. Assume that Benji's uses the periodic inventory method. 1. Purchased land for $8,400 cash. 2. Purchased merchandise on account for $90,000, terms 2'10, nf45. 3. Paid freight of $700 cash on merchandise purchased FOB shipping point. 4. Returned $3,000 of defective merchandise purchased in Event 2. 5. Sold merchandise for $80,000 cash. 6. Sold merchandise on account for $81,000, terms 3310, n80. 7. Paid cash within the discount period on accounts payable due on merchandise purchased in Event 2. 8. Paid $11,000 cash for selling expenses. 9. Collected $44,000 of the accounts receivable from Event 6 within the discount period. I0. Collected $37,000 of the accounts receivable but not within the discount period. 11. Paid $5,800 of other operating expenses. I2. A physical count indicated that $47,000 of inventory was on hand at the end of the accounting period. Required a. Record the preceding transactions in a horizontal statements model. In the Cash Flows column, use 0A to designate operating activity, IA for investing activity, FA for nancing activity, or NC for net change. If the account is not affected by the event, leave th: cell blank. The beginning balances have been recorded as an example. b. Prepare a schedule of cost of goods sold and an income statement. Record the preceding transactions in a horizontal statements model. In the Cash Flows column, use OA to designate operating activity, IA for investing activity, FA for financing activity, or event, leave the cell blank. The beginning balances have been recorded as an example. (Not every cell will require entry. Enter any decreases to account balances and cash outflows with BENJI'S GROCERY Horizontal Statements Model Balance Sheet Income Statement Event Assets = Liabilities + Stockholders' Equity Cash Accounts Receivable Merchandise Land Accounts Common Inventory Retained Revenue Expenses = Net Income Statement of Cash Flows Payable Stock Earnings Bal. 23,000 + 3,400 + 44,000 + = 3,400 + 37,000 + 30,000 1 (8,400) + + + 8,400 + + 2 + + 1A 90,000 + 90,000 + OA 3. 700) + + + + + 700 = (700) OA 4 + + (3,000) + (3,000) + + 5 80,000 + + + 80,000 80.000 OA 6 + 81,000 + + 81,000 81,000 7a (85,360) DA + + + (87,000) + 1,740 1,740 7b + + OA + + + 8 (11,000) + + + 11,000 = (11,000) OA 9a. 42,680 + 44,000) + + + 1,320 9b (1,320) OA + + + + OA 10. 37,000 + (37,000) + + + + OA 11 (5,800) + + + 6,800 = (5,800 DA 12. + + (84,000) + + + + 84,000 = (84,000) Total $ 71,420 + $ 3,400 + $ 47,000 + $ 8,400 $ 3,400 + $ 37,000 + $ 30,000 $ 162,740 $ 102,820 = $ 59,920 $ 0Prepare a schedule of cost of goods sold. BENJI'S GROCERY Schedule of Cost of Goods Sold For the Year Ended December 31, Year 2 Cost of goods available for sale Cost of goods soldPrepare an income statement. BENJI'S GROCERY Income Statement For the Year Ended December 31, Year 2 Revenue Net sales 0 Operating expenses Total operating expenses
