The following events were completed by John's Hobby Shop in September 2012. Sept. 1 Acquired $40,000 cash
Question:
The following events were completed by John's Hobby Shop in September 2012.
Sept. 1 Acquired $40,000 cash from the issue of common stock.
1 Purchased $28,000 of merchandise on account with terms 2/10, n/30.
5 Paid $600 cash for freight to obtain merchandise purchased on September 1.
8 Sold merchandise that cost $9,000 to customers for $17,000 on account, with terms
1/10, n/30.
8 Returned $900 of defective merchandise from the September 1 purchase to the supplier.
10 Paid cash for the balance due on the merchandise purchased on September 1.
20 Received cash from customers of September 8 sale in settlement of the account balances, but not within the discount period.
30 Paid $3,250 cash for selling expenses.
Required
a. Record each event in a statements model like the following one. The first event is recorded as an example.
b. Prepare an income statement for the month ending September 30.
c. Prepare a statement of cash flows for the month ending September 30.
d. Explain why there is a difference between net income and cash flow from operatingactivities.
.png)
Step by Step Answer:
a Johns Hobby Shop Effect of Transactions on Financial Statements Using Horizontal Statements Model Balance Sheet Income Statement Statement of Date A...View the full answer
