The Pet Store experienced the following events for the Year 1 accounting period Acquired $90,000 cash from the issue of common stock

2. Purchased $82,500 of inventory on account .

3. Received goods purchased in Event 2 FOB shipping pointtransportation cost of $1,120 paid in 4. Sold inventory on account that cost $52,000 for $99,000

5. Transportation cost on the goods sold in Event 4 was $990The goods were shipped FOB destinationCash was paid for the transportation cost

6.Customer Event 4 returned $4,960 worth of goods that had a cost of $2,530

7. Collected $81,180 cash from accounts receivable

8. Paid $73,200 cash on accounts payable .

9. Paid $3,340 for advertising expense. Paid $3,300 cash for insurance expense

The following events affected the company during the Year 2 accounting period:

1. Purchased merchandise on account that cost $4,270.

2. The goods in Event 1 were purchased FOB shipping point with transportation cost of $265 cash

3. Returned $400 of damaged merchandise.

4. Agreed to keep other damaged merchandise for which the company received a $295 allowance

5. Sold merchandise that cost $2,740 for $4,930 cash

6. Delivered merchandise to customers in Event 5 under terms FOB destination with transportation costs amounting to $185 cash.

7. Paid $2,890 on the merchandise purchased in Event 1.

Year 1 Kim Company sold land for $98,000 cash. The land had originally cost $45,000. Also, Kim sold Inventory that had cost $189,000 for $279,000 cash. Operating expenses amounted to $33,000.

\begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|} \hline \multicolumn{11}{|c|}{ TERRY'S AUTO SHOP } \\ \hline \multicolumn{11}{|c|}{ Effect of Events on the Financial Statements } \\ \hline \multirow[b]{2}{*}{ Events } & \multicolumn{3}{|c|}{ Assots } & \multirow{2}{*}{\begin{tabular}{l} = \\ = \end{tabular}} & \multirow{2}{*}{\begin{tabular}{l} Liabilities \\ Accounts \\ Payable \end{tabular}} & \multirow{2}{*}{\begin{tabular}{l} + \\ + \end{tabular}} & \multicolumn{3}{|c|}{ Stockholders' Equity } & \multirow{2}{*}{\begin{tabular}{c} Accounts Titles for Retained \\ Earnings \end{tabular}} \\ \hline & Cash & + & Inventory & & & & \begin{tabular}{l} Common \\ Stock \end{tabular} & + & \begin{tabular}{l} Retained \\ Earnings \end{tabular} & \\ \hline Beginning Balance & & +7 & & = & & +7 & & +1 & & \\ \hline 1. Purchased Inventory & & + & & = & & +3 & & +1 & & \\ \hline 2. Transport & & + & & = & & +1 & & + & & \\ \hline 3. Returned Inventory & & +1 & & = & & + & & +1 & & \\ \hline 4. Allowance & & + & & = & & +1 & & + & & \\ \hline \multicolumn{11}{|l|}{ 5a. Sales } \\ \hline \multicolumn{11}{|l|}{5bCost} \\ \hline 6. Transportation & & + & & = & & + & & + & 4 & \\ \hline 7. Paid Aocounts Payable & & + & & = & & +1 & & +1 & & \\ \hline Ending Balance & 0 & + & 0 & = & 0 & + & 0 & + & 0 & \\ \hline \end{tabular} THE PET STORE Horizontal Statements Model for Year 1 \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline \multirow{3}{*}{ Events } & \multicolumn{11}{|c|}{ Balance 5heet } & \multicolumn{3}{|c|}{ Income State } \\ \hline & \multicolumn{5}{|c|}{ Assets } & \multirow{2}{*}{\multicolumn{2}{|c|}{\begin{tabular}{c} Liabilities \\ = Accounts \\ Payable \end{tabular}}} & \multirow[b]{2}{*}{+} & \multicolumn{3}{|c|}{ Stockholders' Equity } & \multirow[b]{2}{*}{ Revenue: } & \multirow[b]{2}{*}{-} & \multirow[b]{2}{*}{ Expease } \\ \hline & Cash & + & \begin{tabular}{l} Accounts \\ Recolvable \end{tabular} & + & laventory & & & & \begin{tabular}{l} Common \\ Stock \end{tabular} & + & \begin{tabular}{l} Retained \\ Eamings \end{tabular} & & & \\ \hline 1. Stock & 90,000 & + & & + & & = & & + & 90,000 & + & & & - & \\ \hline 2. Purchased imventory & & + & & + & & =6 & & +F & & + & & & - & \\ \hline 3. Transport & & + & & + & & = & & + & & + & & & - & \\ \hline 4a, Sold imventory & & + & & + & & = & & + & & + & & & - & \\ \hline 4b. Cost & & + & & + & & = & & + & & + & & & - & \\ \hline 5. Paid tramportation & & + & & + & & = & & + & & + & & & - & \\ \hline 6a. Rebumed sale & & + & & + & & = & & +? & & + & & & - & \\ \hline 6b. Returned imventory & & + & & + & & = & & + & & + & & & - & \\ \hline 7. Cellected Accounts Recoivable & & + & & + & & = & & - & & + & & & - & \\ \hline a. Paid Accounts Payable & & + & & + & & is & & + & & + & & & -1 & \\ \hline a. Paid expense & & + & & + & & = & & + & & + & & & = & \\ \hline 10. Paid exponse & & + & & 1 & & = & & + & & + & & & 1= & \\ \hline Ending Ealance & 90,000 & + & 0 & . & 0 & = & 0 & + & 90.000 & + & \begin{tabular}{r} 0 \\ \end{tabular} & \begin{tabular}{r} 0 \\ \end{tabular} & - & \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline \multicolumn{3}{|c|}{ TERRY'S AUTO SHOP } \\ \hline \multicolumn{3}{|c|}{ Statement of Cash Flows } \\ \hline \multicolumn{3}{|c|}{ For the Year Ended December 31, Year 2} \\ \hline \multicolumn{3}{|l|}{ Cash flow from operating activities } \\ \hlineP & & \\ \hline ? & & \\ \hline & & \\ \hline & & \\ \hline Net cash flow from operating activities & $ & 0 \\ \hline Cash flows from investing activities & & \\ \hline Cash flows from financing activities & & \\ \hline Net change in cash & & 0 \\ \hline & & \\ \hline Ending cash balance & $ & 0 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|} \hline \multirow{2}{*}{\multicolumn{3}{|c|}{ Stockholders' Equity }} & \multicolumn{5}{|c|}{ Income Statement } & \multirow{2}{*}{\multicolumn{2}{|c|}{\begin{tabular}{c} Statement of Cash \\ Flow \end{tabular}}} \\ \hline & & & \multirow{2}{*}{ Revenue } & \multirow{2}{*}{-} & \multirow{2}{*}{ Expense } & \multirow{2}{*}{=} & \multirow{2}{*}{ Net Income } & & \\ \hline \begin{tabular}{l} ommon \\ Stock \end{tabular} & + & \begin{tabular}{l} Retained \\ Earnings \end{tabular} & & & & & & & \\ \hline 90,000 & + & & & - & & = & & 90,000 & FA \\ \hline & + & & & - & & = & F & & \\ \hline & + & & & - & & = & & & \\ \hline & + & & & - & & = & & & \\ \hline & + & & 7 & - & & = & & & \\ \hline & + & & & - & & = & & & \\ \hline & + & & 5 & - & & = & & & \\ \hline & + & & 7 & - & & = & & & \\ \hline & + & & 5 & - & & = & & & \\ \hline & + & & 7 & - & & = & & & \\ \hline & + & & 7 & - & & = & & & \\ \hline & + & & & - & & = & & & \\ \hline 90,000 & + & 0 & 0 & - & 0 & = & 0 & 90,000 & \\ \hline \end{tabular} Which of these events affect period (selling and administrative) costs? Which result in product costs? If neither, label the transaction NA. The beginning account balances for Terry's Auto Shop as of January 1, Year 2, follow: The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $4,270. 2. The goods in Event 1 were purchased FOB shipping point with transportation cost of $265 cash. 3. Returned $400 of damaged merchandise. 4. Agreed to keep other damaged merchandise for which the company received a $295 allowance. 5. Sold merchandise that cost $2,740 for $4,930 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with transportation costs amounting to $185 cash. 7. Paid $2,890 on the merchandise purchased in Event 1. b. Assume that normal operating activities grow evenly by 23 percent during Year 2. Prepare a Year 2 multistep income statement for Kim Company. c. Determine the percentage change in net income between Year 1 and Year 2. Note: Round your answer to nearest whole percentage. Prepare an income statement. a. Prepare a Year 1 multistep income statement for Kim Company. \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|} \hline \multicolumn{11}{|c|}{ TERRY'S AUTO SHOP } \\ \hline \multicolumn{11}{|c|}{ Effect of Events on the Financial Statements } \\ \hline \multirow[b]{2}{*}{ Events } & \multicolumn{3}{|c|}{ Assots } & \multirow{2}{*}{\begin{tabular}{l} = \\ = \end{tabular}} & \multirow{2}{*}{\begin{tabular}{l} Liabilities \\ Accounts \\ Payable \end{tabular}} & \multirow{2}{*}{\begin{tabular}{l} + \\ + \end{tabular}} & \multicolumn{3}{|c|}{ Stockholders' Equity } & \multirow{2}{*}{\begin{tabular}{c} Accounts Titles for Retained \\ Earnings \end{tabular}} \\ \hline & Cash & + & Inventory & & & & \begin{tabular}{l} Common \\ Stock \end{tabular} & + & \begin{tabular}{l} Retained \\ Earnings \end{tabular} & \\ \hline Beginning Balance & & +7 & & = & & +7 & & +1 & & \\ \hline 1. Purchased Inventory & & + & & = & & +3 & & +1 & & \\ \hline 2. Transport & & + & & = & & +1 & & + & & \\ \hline 3. Returned Inventory & & +1 & & = & & + & & +1 & & \\ \hline 4. Allowance & & + & & = & & +1 & & + & & \\ \hline \multicolumn{11}{|l|}{ 5a. Sales } \\ \hline \multicolumn{11}{|l|}{5bCost} \\ \hline 6. Transportation & & + & & = & & + & & + & 4 & \\ \hline 7. Paid Aocounts Payable & & + & & = & & +1 & & +1 & & \\ \hline Ending Balance & 0 & + & 0 & = & 0 & + & 0 & + & 0 & \\ \hline \end{tabular} THE PET STORE Horizontal Statements Model for Year 1 \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline \multirow{3}{*}{ Events } & \multicolumn{11}{|c|}{ Balance 5heet } & \multicolumn{3}{|c|}{ Income State } \\ \hline & \multicolumn{5}{|c|}{ Assets } & \multirow{2}{*}{\multicolumn{2}{|c|}{\begin{tabular}{c} Liabilities \\ = Accounts \\ Payable \end{tabular}}} & \multirow[b]{2}{*}{+} & \multicolumn{3}{|c|}{ Stockholders' Equity } & \multirow[b]{2}{*}{ Revenue: } & \multirow[b]{2}{*}{-} & \multirow[b]{2}{*}{ Expease } \\ \hline & Cash & + & \begin{tabular}{l} Accounts \\ Recolvable \end{tabular} & + & laventory & & & & \begin{tabular}{l} Common \\ Stock \end{tabular} & + & \begin{tabular}{l} Retained \\ Eamings \end{tabular} & & & \\ \hline 1. Stock & 90,000 & + & & + & & = & & + & 90,000 & + & & & - & \\ \hline 2. Purchased imventory & & + & & + & & =6 & & +F & & + & & & - & \\ \hline 3. Transport & & + & & + & & = & & + & & + & & & - & \\ \hline 4a, Sold imventory & & + & & + & & = & & + & & + & & & - & \\ \hline 4b. Cost & & + & & + & & = & & + & & + & & & - & \\ \hline 5. Paid tramportation & & + & & + & & = & & + & & + & & & - & \\ \hline 6a. Rebumed sale & & + & & + & & = & & +? & & + & & & - & \\ \hline 6b. Returned imventory & & + & & + & & = & & + & & + & & & - & \\ \hline 7. Cellected Accounts Recoivable & & + & & + & & = & & - & & + & & & - & \\ \hline a. Paid Accounts Payable & & + & & + & & is & & + & & + & & & -1 & \\ \hline a. Paid expense & & + & & + & & = & & + & & + & & & = & \\ \hline 10. Paid exponse & & + & & 1 & & = & & + & & + & & & 1= & \\ \hline Ending Ealance & 90,000 & + & 0 & . & 0 & = & 0 & + & 90.000 & + & \begin{tabular}{r} 0 \\ \end{tabular} & \begin{tabular}{r} 0 \\ \end{tabular} & - & \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline \multicolumn{3}{|c|}{ TERRY'S AUTO SHOP } \\ \hline \multicolumn{3}{|c|}{ Statement of Cash Flows } \\ \hline \multicolumn{3}{|c|}{ For the Year Ended December 31, Year 2} \\ \hline \multicolumn{3}{|l|}{ Cash flow from operating activities } \\ \hlineP & & \\ \hline ? & & \\ \hline & & \\ \hline & & \\ \hline Net cash flow from operating activities & $ & 0 \\ \hline Cash flows from investing activities & & \\ \hline Cash flows from financing activities & & \\ \hline Net change in cash & & 0 \\ \hline & & \\ \hline Ending cash balance & $ & 0 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|} \hline \multirow{2}{*}{\multicolumn{3}{|c|}{ Stockholders' Equity }} & \multicolumn{5}{|c|}{ Income Statement } & \multirow{2}{*}{\multicolumn{2}{|c|}{\begin{tabular}{c} Statement of Cash \\ Flow \end{tabular}}} \\ \hline & & & \multirow{2}{*}{ Revenue } & \multirow{2}{*}{-} & \multirow{2}{*}{ Expense } & \multirow{2}{*}{=} & \multirow{2}{*}{ Net Income } & & \\ \hline \begin{tabular}{l} ommon \\ Stock \end{tabular} & + & \begin{tabular}{l} Retained \\ Earnings \end{tabular} & & & & & & & \\ \hline 90,000 & + & & & - & & = & & 90,000 & FA \\ \hline & + & & & - & & = & F & & \\ \hline & + & & & - & & = & & & \\ \hline & + & & & - & & = & & & \\ \hline & + & & 7 & - & & = & & & \\ \hline & + & & & - & & = & & & \\ \hline & + & & 5 & - & & = & & & \\ \hline & + & & 7 & - & & = & & & \\ \hline & + & & 5 & - & & = & & & \\ \hline & + & & 7 & - & & = & & & \\ \hline & + & & 7 & - & & = & & & \\ \hline & + & & & - & & = & & & \\ \hline 90,000 & + & 0 & 0 & - & 0 & = & 0 & 90,000 & \\ \hline \end{tabular} Which of these events affect period (selling and administrative) costs? Which result in product costs? If neither, label the transaction NA. The beginning account balances for Terry's Auto Shop as of January 1, Year 2, follow: The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $4,270. 2. The goods in Event 1 were purchased FOB shipping point with transportation cost of $265 cash. 3. Returned $400 of damaged merchandise. 4. Agreed to keep other damaged merchandise for which the company received a $295 allowance. 5. Sold merchandise that cost $2,740 for $4,930 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with transportation costs amounting to $185 cash. 7. Paid $2,890 on the merchandise purchased in Event 1. b. Assume that normal operating activities grow evenly by 23 percent during Year 2. Prepare a Year 2 multistep income statement for Kim Company. c. Determine the percentage change in net income between Year 1 and Year 2. Note: Round your answer to nearest whole percentage. Prepare an income statement. a. Prepare a Year 1 multistep income statement for Kim Company