Reference no: EM132620889

Crystal

Apple Sales Company began Year 2 with cash of $2,000, inventory of $3,600 (200 crystal apples that cost $18 each), $2,500 of common stock, and $3,100 of retained earnings. The following events occurred during Year 2.

1. Crystal Apple purchased additional inventory twice during Year 2. The first purchase consisted of 800 apples that cost $20 each, and the second consisted of 1,200 apples that cost $24 each. The purchases were on account.

2. The company sold 2,040 apples for cash at a selling price of $40 each.

3. The company paid $44,800 cash on accounts payable for inventory purchases.

4. Crystal Apple paid $26,000 cash for operating expenses.

Required

Problem a. Record the events in ledger T-accounts or using the horizontal financial statements model using the three different cost flow assumptions: FIFO and weighted average.

Problem b. Prepare an income statement, a balance sheet, and a statement of cash flows under each of the TWO cost flow assumptions.