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The following transactions apply to Comfort Mattress Sales for 2010. 1. The business was started when the company received $30,000 from the issue of common
The following transactions apply to Comfort Mattress Sales for 2010. |
1. | The business was started when the company received $30,000 from the issue of common stock. |
2. | Purchased mattress inventory of $200,000 on account. |
3. | Sold mattresses for $300,000 cash (not including sales tax). Sales tax of 8 percent is collected when the merchandise is sold. The merchandise had a cost of $150,000. |
4. | Provided a six-month warranty on the mattresses sold. Based on industry estimates, the warranty claims would amount to 2 percent of mattress sales. |
5. | Paid the sales tax to the state agency on $250,000 of the sales. |
6. | On September 1, 2010, borrowed $30,000 from the local bank. The note had a 6 percent interest rate and matured on March 1, 2011. |
7. | Paid $4,600 for warranty repairs during the year. |
8. | Paid operating expenses of $96,000 for the year. |
9. | Paid $175,000 of accounts payable. |
10. | Record accrued interest on the note issued in transaction no. 6. |
Required: |
(a) | Record the above transactions in a horizontal statements model like the following one. (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Omit the "$" sign in your response.) |
(b) | Prepare the income statement, balance sheet, and statement of cash flows for 2010. (Leave no cells blank - be certain to enter '0" wherever required. Negative amounts should be indicated by a minus sign. For Income Statement Except "interest expense" individual expenses should be entered as a positive value. Omit the "$" sign in your response.)
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