Problemjustin swords started a small merchandising business, Ask an Expert

Accounting

Problem

Justin Swords started a small merchandising business in 2014. The business experienced the following events during its first year of operation. Assume that Swords uses the perpetual inventory system.

1. Acquired $40,000 cash from the issue of common stock.
2. Purchased inventory for $27,000 cash.
3. Sold inventory costing $17,000 for $29,000 cash.

Required

a. Record the events in a statements model like the one shown below. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, NC for net change in cash and NA to indicate the element is not affected by the event. The first event is recorded as an example.

b. Prepare an income statement for 2014 (use the multistep format) JUSTIN SWORDS MERCHANDISING Income Statement For the Year Ended December 31, 2014.

c. What is the amount of total assets at the end of the period?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92721420

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