Reference no: EM13933098
The following trial balance pertains to Cal's Grocery as of January 1, 2014:
Account Title Beginning Balances:
Cash ............ $ 52,000
Accounts receivable ......$ 8,000
Merchandise inventory ..... $ 100,000
Accounts payable .......$ 8,000
Common stock ........$ 86,000
Retained earnings .......$ 66,000
The following events occurred in 2014. Assume that Cal's uses the periodic inventory method.
1. Purchased land for $40,000 cash.
2. Purchased merchandise on account for $252,000, terms 1/10, n/45.
3. Paid freight of $2,000 cash on merchandise purchased FOB shipping point.
4. Returned $7,200 of defective merchandise purchased in Event 2.
5. Sold merchandise for $172,000 cash.
6. Sold merchandise on account for $240,000, terms 2/10, n/30.
7. Paid cash within the discount period on accounts payable due on merchandise purchased in Event 2.
8. Paid $23,200 cash for selling expenses.
9. Collected $95,000 of the accounts receivable from Event 6 within the discount period.
10. Collected $62,000 of the accounts receivable but not within the discount period.
11. Paid $13,200 of other operating expenses.
12. A physical count indicated that $53,100 of inventory was on hand at the end of the accounting period.
Required:
a. Record the above transactions in a horizontal statements model like the following one.
b. Prepare a schedule of cost of goods sold and an income statement.
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