Rico decided to start a shop that sells various water toys and clothing to the stores in the area. Rico named the shop Chaska Water Shop The following are the transactions for the first month of operation (September 2018) for Chaska Water Shop September 1 Rico invested $50,000 in cash and received the company's stocks 1 Purchased $15,000 of merchandise from LLB on account. The purchase term is 4/15. n/30, FOB shipping point 1 Purchased $50,000 of merchandise on account from Water Splash. Terms, 4/15, n/45, FOB shipping point. Water Splash prepaid the $350 shipping cost and added the amount to the invoice. 2 Paid a $200 freight bill for delivey of goods to LLB purchased on September 1 3 Purchased $500 of supplies on lount from Office Paper Terms 1/10, 1/30, FOB destination. 4 Returned $2,000 of merchandise purchased on September i from LLB because of defects and received full credit 5 Sold $6,000 of merchandise on account to Air & Water, Inc. The cost of the merchandise is $2,000 The sales term is 4/15. n/45, FOB destination 6 Paid $300 to ship the goods sold on September 5 to Air & Water, Inc 7 Sold $15,000 of merchandise on account to Ls. The sales term is 2/15, n/45, FOB destination. The merchandise costed $6,500. 8 Paid $100 freight charges to deliver goods to LS. 9 Returned $4,000 of the merchandise purchased from Water Splash on September 1 and received a credit. 10 Sold 57,500 of merchandise to the Bahamas for cash. The cost of the merchandise is $2,500, 11 Sold 56,000 of merchandise to Caca. Terms, 4/10, 1/30, FOB shipping point. The cost of the merchandise is $1,500 12 Paid for the supplies purchased from Office Paper on September 3. 13 Granted Caca a $1,000 allowance on the sale on September 11 for defects in the merchandise 14 Sold $6,000 of merchandise to a customer for cash. The cost of the merchandise sold is $3,500, 15 Paid in full the amount owed to LLB from the purchase on September 1. 15 Pald Water Splash the amount due from September 1 purchase in full 17 LS returned $500 of merchandise from September 7 sale (cost $200). 19 Received full payment from Air & Water, Inc. for the sale on September 5, 20 Received payment in full from Cnce for the sale in September 11. 21 Received payment in full from LS for the September 7 sale. 28 Purchased $5,000 inventory and paid cash Instruction 1 Prepare the necessary Journal entries for Chaska Water Shop for the month of September 2 Prepare the income Statement for Chaska Water Shop for the month of September. 3 Prepare the Statement of Retained Earnings for Chaska Water Shop for the month of September 4 Prepare the Balance Sheet for Chaska Water Shop at September 30
