Problem 3-1

Lisas Dress Shop (LDS) experienced the following events in 2017. Indicate how each of the events affects the companys financial statements, using the financial statement model provided. LDS beginning balances for 2017 are Cash $100,000, Common Stock $75,000 and Retained Earnings $25,000.

1. LDS purchased merchandise with a list price of $65,000 on account, terms 2/10, n/30.

2. The goods were purchased FOB shipping point with freight cost paid of $1,500 in cash.

3. (a) Sold merchandise for $80,000 to a customer on account. (b) The merchandise sold had a net cost to LDS of $48,900.

4. LDS paid in cash freight cost of $1,100 for goods delivered to customers FOB destination.

5. Paid the balance due on accounts payable of $63,700 within the discount period.

6. Collected $55,000 cash from accounts receivable customers.

7. Paid $19,600 in cash for other operating expenses.

	Assets					=	Liabilities	+	Stockholders Equity
	Cash	+	Accounts Receivable	+	Inventory	=	Accounts Payable	+	Common Stock	Retained Earnings	Account Title for Retained Earnings
Beginning Balances, 1/1/17	100,000								75,000	25,000
1.
2.
3(a)
3(b)
4.
5.
6.
7.
Ending Balances, 12/31/17

After recording the above transactions, prepare an income statement and balance sheet for calendar year 2017.