Reference no: EM133007380

Listed below are selected examples of transactions related to the purchase and sale of inventory from the perspective of the seller or the buyer as indicated. Assume a perpetual inventory system is in use.

1. Buyer: Purchase of $ 4,410 of inventory for cash.
2. Buyer: Return of $ 945 of inventory to seller for credit on account.
3. Buyer: Purchase of $ 5,040 of inventory on account, terms 2/10, n/45.
4. Buyer: Payment of $ 550 cash for freight on purchase of inventory (FOB shipping point).
5. Buyer: Payment of amount owed for purchase of $ 4,410 of inventory, terms 2/10, n/30, paid within discount period.
6. Seller: Sale of inventory on account, terms n/30. Selling price $ 20,000; cost $ 8,000. Management expects a return rate of 7.69%.
7. Seller: Return of damaged inventory from buyer for cash. Selling price $ 670; cost $ 291. All of the goods were discarded because they are not resaleable.
8. Seller: Payment of $ 710 cash for freight on sale of inventory (FOB destination).
9. Seller: Return of unwanted inventory from buyer for credit on account. Selling price $ 550; cost $ 197. Goods restored to inventory for future resale.
10. Seller: Receipt of payment ($ 10,080) from customer on account, terms n/30.

Problem 1: Determine where each of the following items would appear on (a) a single-step statement of income and (b) a multiple-step statement of income.