3 The following events were completed by Yang\'s Imports in September 2014 1Acqu
ID: 2542427 • Letter: 3
Question
3 The following events were completed by Yang's Imports in September 2014 1Acquired $30,000 cash from the issue of common stock 1 Purchased $18,000 of merchandise on account with terms 2/10, n/30 5 Paid $400 cash for freight to obtain merchandise purchased on September 1 8 Sold merchandise that cost $10,000 to customers for $19,000 on account, with terms 2/10, n/30 8 Returned $750 of defective merchandise from the September 1 purchase to the supplier 10 Paid cash for the balance due on the merchandise purchased on September 1 Sept. 20 Received cash from customers of September 8 sale in settlement of the account balances, but not within the discount period 30 Paid $2,450 cash for selling expenses. Required a. Record each event in a statements model like the following one. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, NC for net change in cash and NA to indicate the element is not affected by the event. The first event is recorded as an example. (Enter any decreases to account balances and cash outflows with a minus sign.) YANG'S IMPORTS Effect of Transactions on Financial Statements Using Horizontal Statements Model Balance Sheet Income Statement Liabilities + Stockholders' Equity Statement of Cash Flows Assets Accounts Receivable+InventoryAccounts Date Net Retained Revenue -Expenses Earnings = Income CashReceivable Payable Stock 30,000 + 0,000+ 30,000 FA 9/5 9/8a 9/8b 9/8 9/10 9/20 9/30 Tota S 30,000S 0S 30,000$ 0 $ 30,000Explanation / Answer
Yang’s Imports
Yang's Imports
Effect of transactions on financial statements using Horizontal Statements Model
Balance Sheet
Balance Sheet
Income Statement
Date
Assets
Cash
+
Accounts Receivable
+
Inventory
=
Accounts Payable
+
Common Stock
+
Retained Earnings
Revenue
-
Expenses
=
Net Income
Statement of Cash Flows
1-Sep
$30,000
+
-
+
-
=
-
+
30,000
+
-
-
-
-
=
-
30,000
FA
1-Sep
-
+
-
+
18,000
=
18,000
+
-
+
-
-
-
-
=
-
-
-
5-Sep
($400)
+
-
+
$400
=
-
+
-
+
-
-
-
-
=
-
($400)
OA
9/8a
-
+
$19,000
+
-
=
+
-
+
$19,000
$19,000
-
-
=
$19,000
-
-
9/8b
-
+
-
+
($10,000)
=
-
+
-
+
($10,000)
-
-
($10,000)
=
($10,000)
-
-
8-Sep
-
+
-
+
($750)
=
($750)
+
-
+
-
-
-
-
=
-
-
-
10-Sep
($16,905)
+
-
+
($345)
=
($17,250)
+
-
+
-
-
-
-
=
-
($16,905)
OA
20-Sep
$19,000
+
($19,000)
+
-
=
-
+
-
+
-
-
-
-
=
-
$19,000
OA
30-Sep
($2,450)
+
-
+
-
=
-
+
-
+
($2,450)
-
-
($2,450)
=
($2,450)
($2,450)
OA
Total
$29,245
+
0
+
$7,305
=
0
+
$30,000
+
$6,550
$19,000
-
($12,450)
=
$6,550
$29,245
NC
Discount received for payment within the discount period –
Inventory purchased $18,000
Less: purchase returns $750
Net Inventory $17,250
Discount at 2%, = 17,250 x 2% = $345
Net cash paid = $16,905
Income Statement –
Yang's Imports
Income Statement
for the month ended September 30, 2014
Revenue
$19,000
Less: Cost of goods sold
($10,000)
Gross margin
$9,000
Less: operating expenses
($2,450)
Net Income
$6,550
Cash Flow Statement –
Yang's Imports
Statement of Cash Flows
for the month ended September 30, 2014
Cash flows from operating activities:
Cash inflow
$19,000
payment towards inventory
($17,305)
payment towards Selling and Admn.
($2,450)
Net cash flow from operating activities
($755)
Cash flows from investing activities
$0
Cash flow from financing activities:
issue of common shares
$30,000
net cash flow from financing activities
$30,000
Net Increase in cash
$29,245
Beginning cash balance
$0
Ending cash balance
$29,245
Yang's Imports
Effect of transactions on financial statements using Horizontal Statements Model
Balance Sheet
Balance Sheet
Income Statement
Date
Assets
Cash
+
Accounts Receivable
+
Inventory
=
Accounts Payable
+
Common Stock
+
Retained Earnings
Revenue
-
Expenses
=
Net Income
Statement of Cash Flows
1-Sep
$30,000
+
-
+
-
=
-
+
30,000
+
-
-
-
-
=
-
30,000
FA
1-Sep
-
+
-
+
18,000
=
18,000
+
-
+
-
-
-
-
=
-
-
-
5-Sep
($400)
+
-
+
$400
=
-
+
-
+
-
-
-
-
=
-
($400)
OA
9/8a
-
+
$19,000
+
-
=
+
-
+
$19,000
$19,000
-
-
=
$19,000
-
-
9/8b
-
+
-
+
($10,000)
=
-
+
-
+
($10,000)
-
-
($10,000)
=
($10,000)
-
-
8-Sep
-
+
-
+
($750)
=
($750)
+
-
+
-
-
-
-
=
-
-
-
10-Sep
($16,905)
+
-
+
($345)
=
($17,250)
+
-
+
-
-
-
-
=
-
($16,905)
OA
20-Sep
$19,000
+
($19,000)
+
-
=
-
+
-
+
-
-
-
-
=
-
$19,000
OA
30-Sep
($2,450)
+
-
+
-
=
-
+
-
+
($2,450)
-
-
($2,450)
=
($2,450)
($2,450)
OA
Total
$29,245
+
0
+
$7,305
=
0
+
$30,000
+
$6,550
$19,000
-
($12,450)
=
$6,550
$29,245
NC
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