The trial balance for The Bolt Co. as of January 1, 2016, was as follows: The following

Question:

The trial balance for The Bolt Co. as of January 1, 2016, was as follows:

The following events affected the company during the 2016 accounting period:
1. Purchased merchandise on account that cost $8,200.
2. The goods in Event 1 were purchased FOB shipping point with freight cost of $600 cash.
3. Returned $800 of damaged merchandise for credit on account.
4. Agreed to keep other damaged merchandise for which the company received a $400 allowance.
5. Sold merchandise that cost $5,500 for $9,500 cash.
6. Delivered merchandise to customers under terms FOB destination with freight costs amounting to $300 cash.
7. Paid $5,000 on the merchandise purchased in Event 1.
Required
a. Record the transactions in general journal format.
b. Open general ledger T-accounts with the appropriate beginning balances, and post the journal entries to the T-accounts.
c. Prepare an income statement and statement of cash flows for 2016.
d. Explain why a difference does or does not exist between net income and net cash flow from operating activities.