ACCT 110 CHAPTER 3HW
Carol Clocks Inc (CC)experienced the following events in 2019 and uses the perpetual inventory method. Beginning cash balance is $200,000. For each event, show:
1. Prepare a Cash Flow Statement. (use proper format)
2. , balance sheet (A=L+E) and the income statement (R-E=NI) are affected, using specific dollar amount.
(present in example format below)
(show in equation form with clearly labeled and properly labeled) Be sure the equation balances.
1.CC issued $50,000 of common stock.
2.CC purchased for cash merchandise inventory for $100,000
3.The freight terms for the inventory merchandise in #1 were FOB shipping point. CC paid the freight cost of $500 in cash.
4.An inspection revealed that some of the inventory purchased in #1 was defective, and that had a cost of $5,000. CC returned this merchandise to the supplier.
5.CC sold 100 clocks at a sales price of $300 each ON ACCOUNT to customers. CC had purchased the merchandise inventory sold for $10,000 (#1). HINT: it is now that the merchandise inventory becomes an expense.
6.CC customers returned some merchandise CC had sold them in #5. The merchandise had been sold for the $3,000 and had been purchased by CC for $1,000.
7.CC paid (in cash) freight cost of $4,000 for goods delivered to customers in #5, FOB destination.
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| Assets | = | Liab. | + | Equity |
| Rev. | − | Exp. | = | Net Inc. |
| Cash Flow |
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| Cash | + | Inven. | = | Liab. | + | C. Stk. | + | Ret. Ear. |
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Beg. Bal. |
| -0- | + | 0- | = | -0- | + | -0- | + | -0- |
| -0- | – | -0- | = | -0- |
| -0- |
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| | + | 0 | = | -0- | + |
| + | -0- |
| -0- | – | -0- | = | -0- |
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| = | -0- | + | -0- | + | -0- |
| -0- | – | -0- | = | -0- |
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| | + | -0- | = | -0- | + | -0- | + | |
| | – | -0- | = | |
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| -0- | + | | = | -0- | + | -0- | + | |
| -0- | – | | = | |
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| -0- | – | | = | |
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Totals |
| | + | | = | -0- | + | | + | |
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