Northwest Sales had the following transactions in Year 1: 1. Acquired $200,000 cash from the issue of

Question:

Northwest Sales had the following transactions in Year 1:
1. Acquired $200,000 cash from the issue of common stock.
2. Purchased $900,000 of merchandise for cash in Year 1.
3. Sold merchandise that cost $710,000 for $1,200,000 during the year under the following terms:

$520,000 .............. Cash sales
380,000 ................. Credit card sales (The credit card company charges a 4 percent service fee.)
300,000 ................. Sales on account

4. Collected all the amount receivable from the credit card company.

5. Collected $210,000 of accounts receivable.

6. Paid selling and administrative expenses of $190,000.

7. Determined that 5 percent of the ending accounts receivable balance would be uncollectible.

Required

a. Record these events in a horizontal statements model like the following one. When you record amounts in the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA). The letters NA indicate that an element is not affected by the event.

Balance Sheet Income Statement Statement Assets Stk. Equity of Cash Flows Event Cash + NRV Accts. Rec. + Mdse. Inv. = Com. Stk. + Ret. Earn. Rev. Exp. = Net Inc.