Question

The following events pertain to Link's Surf Shop for October 2012. The company uses PERPETUAL INVENTORY METHOD.

Record the following transactions in horizontal statements model.

           

Oct. 2 Purchased $22,000 of merchandise on account with the terms 2/10, n/30

Oct. 3 Sold merchandise that cost $10,000 for $18,000 to customers on account with the terms 1/10, n/30.

Oct. 4 Returned $2,000 of defective merchandise from the Oct. 2 purchase.

Oct.10 Paid the amount due on the merchandise purchased on Oct. 2.

Oct.12 Received cash from customers in settlement of the Oct. 3 sale.

Balance Sheet

Income Statement

Assets

=

Liab.

+

Stkholders’ Equity

Rev.

-

Exp.

=

Net Inc.

Date

Cash

+

A. Rec.

+

Mdse. Inv.

=

A. Pay.

+

C. Stk.

+

Ret. Ear.

Answer 1

	Balance sheet						income statement
	Assets			liabilties	Stockholders equity		Revenue	expense	net income
date	Cash	Account	Merchandise	Accounts	Common	Retained
		receivable	inventory	payable	Stock	Earnings
2-Oct			22,000	22,000
3-Oct		18,000				18,000	18,000		18,000
			-10,000			-10,000		-10,000	-10,000
4-Oct			-2000	-2000
10-Oct	-19600		-400	-20,000
12-Oct	18,000	-18,000
total	-1600	0	9,600	0		8000	18000	-10000	8000