Question

In: Accounting

The beginning account balances for Terry's Auto Shop as of January 1, Year XXX1, follows: Account...

The beginning account balances for Terry's Auto Shop as of January 1, Year XXX1, follows:
Account titles Beginning balances
Cash $6,100
Inventory $3,180
Common stock $7,460
Retained earnings $1,820
The following events affected the company during the year:
1 Purchased merchandise on account that cost $4,230
2 The goods in event 1 were purchased FOB shipping point with freight cost of $230 cash.
3 Returned $480 of damaged merchandise for credit on account.
4 Agreed to keep other damaged merchandise for which the company received an $205 allowance.
5 Sold merchandise that cost $2,660 for $4,940 cash.
6 Delivered merchandise to customers in event 5 under terms FOB destination with freight costs amounting to $190 cash.
7 Paid $2,940 on the merchandise purchased in event 1
Select ALL statements that are TRUE.
A.
The ending inventory balance is $4,295
B.
The ending balance of Retained earnings is $3,910
C.
The ending cash balance is $7,605
D.
The ending balance of Common stock is $7,460
E.
The ending balance of Accounts payable is $760

Solutions

Expert Solution

Events Cash + Inventory = Accounts Payable + Common Stock + Retained earnings
Beg. Bal.     6,100 +        3,180 = +                  7,460 +                       1,820
1 +        4,230 =                       4,230 + +
2       -230 +           230 = + +
3 +          -480 =                         -480 + +
4 +          -205 =                         -205 + +
5a.     4,940 + = + +                       4,940
5b. +       -2,660 = + +                      -2,660
6       -190 + = + +                         -190
7    -2,940 + =                      -2,940 + +
End. Bal.     7,680 +        4,295 =                          605 +                  7,460 +                       3,910
Following statements are true:
A. $ 4,295
B. $ 3,910
D. $ 7,460

ekkarill92 answered 1 year ago
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