Custom Auto Parts started this year with the following balances: Cash: $60,000 M

Question

Custom Auto Parts started this year with the following balances:

      Cash: $60,000

      Merchandise Inventory: $8,000

      Land: $12,000

      Accounts Payable: $0

      Common Stock: $50,000

      Retained Earnings: $30,000

During the year they had the following transactions:

Purchase $60,000 of merchandise inventory on account, terms 2/10,n/30.

The goods delivered in Event 1 were delivered FOB shipping point. Freight costs of $1,500 were paid in cash by the responsible party

Returned $3,000 of goods purchased in Event 1

Paid the balance due on the goods purchased in Event 1 and recorded the cash discount.

Recognized $59,000 of cash revenue from the sale of merchandise and recognized $45,000 of cost of goods sold from such sale.

The goods sold in Event 5 were delivered to the customers FOB destination. Freight costs of $1,400 were paid in cash by the responsible party.

Paid $9,000 in cash for selling and administrative expenses.

Sold the land for $14,500 in cash.

Using Excel, assuming a perpetual inventory system, record each transaction in the horizontal statements model.

After completing the recording of the transactions, prepare a multistep income statement. Include common size percentages on the income statement.

I need help with this part below!!

0

Event Revenue Capital Gain on Sale of Land Cost of Goods Sold Selling and Adminstrative Transportation-Out Net Income 1 2 3 4 5 6 7 8 59000 0 -45000 0

0

Explanation / Answer

cash discount on payment

Account payable a/c dr 1140

To Inventory 1140   

2. Income statement

Journal entries on each event 1. ON PURCHASE OF GOODS Inventory a/c dr                   60,000.00 To Account payable 60,000.00 2. Purchase return Account payable a/c dr                      3,000.00 to Inventory a/c     3,000.00

cash discount on payment

Account payable a/c dr 1140

To Inventory 1140   

3. on Frieght payment Inventory a/c dr                      1,500.00 To Account payable     1,500.00 4. when goods sold to customer cash a/c dr                   59,000.00 To revenue 59,000.00 5. cost of good sold cost of good sold a/c dr                   45,000.00 To inventory 45,000.00 6.sold of land Cash a/c dr                   14,500.00 To land 12,000.00 Toprofit on sales of land     1,500.00 7. frieght on Sale No entry paid by customer

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