Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The transactions relating to the formation of Blue Co. Stores Inc., and its first month of operations follow. a. The firm was organized and the

image text in transcribed
image text in transcribed
image text in transcribed
The transactions relating to the formation of Blue Co. Stores Inc., and its first month of operations follow. a. The firm was organized and the stockholders invested cash of $8,100. b. The firm borrowed $5,300 from the bank; a short-term note was signed. c. Display cases and other store equipment costing $1,700 were purchased for cash. The original list price of the equipment was $1,980, but a discount was received because the seller was having a sale. d. A store location was rented, and $1,300 was paid for the first month's rent. e. Inventory of $14,200 was purchased; $8,400 cash was paid to the suppliers, and the balance will be paid within 30 days. 1. During the first week of operations, merchandise that had cost $4,900 was sold for $5,700 cash. g. A newspaper ad costing $110 was arranged for; it ran during the second week of the store's operations. The ad will be paid for in the next month. h. Additional inventory costing $4,250 was purchased; cash of $1,250 was paid, and the balance is due in 30 days. 1. In the last three weeks of the first month, sales totaled $14.750, of which $9,600 was sold on account. The cost of the goods sold totaled $8,400. J. Employee wages for the month totaled $1,900; these will be paid during the first week of the next month. k. The firm collected a total of $3,150 from the sales on account recorded in transaction i. 1. The firm paid a total of $4,800 of the amount owed to suppliers from transaction e. Required: a. Record each transaction in the appropriate columns. Indicate the financial statement effect. b. Calculate the total assets, liabilities, and stockholders' equity at the end of the month and calculate the amount of net income for the month. c. After completing parts a through I prepare an income statement for Blue Co. Stores Inc. for the month presented and a balance sheet at the end of the month. ASSETS Merchandise LIABILITIES Notes Accounts Payable Payable STOCKHOLDERS' EQUITY Retained Receivable - Inventory + Equipment - Pald-in Capital Earnings Revenue Expenses 8,100 5,300 1.700 (1.300) 1,300 5,800 14,200 (4.900) 800 K 5,700 110 3.000 (110) 4.250 (8,400) 9.000 1.900 6,350 (1,900) 1.900 (3.150) (4.800) 6,010 6,450 + 5,150 + 1,700 - - 8.100 + 3.840 20.450 - 16.610 Required 8 > Required A Required B Required C1 Required C2 After completing parts a through I, prepare an income statement for Blue Co. Stores Inc. for the month presented. (Enter decreases with a minus sign to indicate a negative income statement effect.) BLUE CO. STORES INC. Income Statement Effect Sales $ Cost of goods sold Gross profit $ Rent expense Wages expense Advertising expense + 20,450 13,300 7,150 1,300 1,900 110 Net income $ 3,840

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

IT And European Bank Performance

Authors: E. Beccalli

1st Edition

0230006949, 9780230006942

More Books

Students also viewed these Accounting questions

Question

Explain how to dispute irrational beliefs. Critical T hinking

Answered: 1 week ago

Question

600 lb 20 0.5 ft 30 30 5 ft

Answered: 1 week ago

Question

Is there any dispute that this is the cause?

Answered: 1 week ago