Reference no: EM13933146
At the beginning of 2013, the Bradley Company had the following balances in its accounts:
During 2013, the company experienced the following events:
1. Purchased inventory that cost $4,400 on account from Bivins Company under terms 1y10, ny30. The merchandise was delivered FOB shipping point. Freight costs of $190 were paid in cash.
2. Returned $400 of the inventory that it had purchased because the inventory was damaged in transit. The seller agreed to pay the return freight cost.
3. Paid the amount due on its account payable to Bivins Company within the cash discount period.
4. Sold inventory that had cost $6,000 for $11,000 on account, under terms 2y10, ny45.
5. Received merchandise returned from a customer. The merchandise originally cost $800 and was sold to the customer for $1,450 cash. The customer was paid $1,450 cash for the returned merchandise.
6. Delivered goods FOB destination in Event 4. Freight costs of $120 were paid in cash.
7. Collected the amount due on the account receivable within the discount period.
8. Sold the land for $8,500.
9. Recognized accrued interest income of $900.
10. Took a physical count indicating that $15,500 of inventory was on hand at the end of the accounting period.
Required:
a. Identify each of these events as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). Also explain how each event would affect the financial statements by placing a + for increase, Use - for decrease, or NA for not affected under each of the components in the following statements model. Assume that the perpetual inventory method is used. When an event has more than one part, use letters to distinguish the effects of each part. The first event is recorded as an example.
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b. Record the events in general journal format.
c. Open ledger T-accounts, and post the beginning balances and the events to the accounts.
d. Prepare a multi step income statement, a statement of changes in stockholders equity, a balance sheet, and a statement of cash flows.
e. Record and post the closing entries, and prepare an post closing trial balance.
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