Problem 2. Scott Company is a merchandising business that was started in 2012. S

Question

Problem 2. Scott Company is a merchandising business that was started in 2012. Scott uses the perpetual inventory system. It experienced the following events during 2012.

1. Acquired $25,000 cash by issuing common stock

2. Purchased inventory on account that cost $14,000, terms 2/10, n/30

3. Sold inventory that had cost $8,400 for $15,000 cash

4. Paid for the merchandise referred to in event 2, within the discount period

Required:

1) Record the events in the financial statements model below; include column totals.

2) Prepare an income statement for 2012.

Explanation / Answer

a)

Cash 27400

Inv 5600

Total Assets 33000

Common Stock 25000

Net income 8000

Total Liabs & OE $33000

b)

Revenue 15000

CGS, net of discounts 7000

Net income $ 8000

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