Question

1. Purchased inventory that cost $5,200 on account from Ross Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $470 were paid in cash.
2. Returned $400 of the inventory it had purchased because the inventory was damaged in transit. The seller agreed to pay the return freight cost.
3. Paid the amount due on its account payable to Ross Company within the cash discount period.
4. Sold inventory that had cost $5,700 for $8,700 on account, under terms 2/10, n/45.
5. Received merchandise returned from a customer. The merchandise originally cost $470 and was sold to the customer for $770 cash. The customer was paid $770 cash for the returned merchandise.
6. Delivered goods FOB destination in Event 4. Freight costs of $570 were paid in cash.
7. Collected the amount due on the account receivable within the discount period.
8. Took a physical count indicating that $1,400 of inventory was on hand at the end of the accounting period.

Fill in the balance sheet and income statement

Assets

=

Liabilities

+

Stockholders’ Equity

Revenue

–

Expenses

=

Net Income

Cash

+

Accounts Receivable

+

Merchandise Inventory

=

Accounts Payable

+

Common Stock

+

Retained Earnings

Answer 1

Particulars	Assets		Liabilities+ Stockholder's Equity
	Cash	+Accounts Receivable	+Merchandise Inventory	=	Accounts Payable	+ Common Stock	+Retained Earnings
Purchase Inventory Costing $ 5200, Freight paid 470	-470		5200	=	5200		-470
Returned Goods worth $ 400			-400	=	-400
Paid the amount within cash discount period	-4704			=	-4800		96
Sold inventory costing $ 5700 for $ 8700		8700	-5700	=			3000
Sales returns	-770		470	=			-300
Freight paid $ 570	-570			=			-570
Collected the AR amount in discount period	8526	-8700		=			-174
Closing Balance of inventory $ 1400			1830	=			1830
Total	2012	0	1400	=	0	0	3412
Income Statement
	Revenue	-	Expenses	=	Net Income
Purchase Inventory Costing $ 5200, Freight paid 470		-	5670	=	-5670
Returned Goods worth $ 400		-	-400	=	400
Discount received		-	-96	=	96
Sales	8700	-		=	8700
Sales returns	-770	-		=	-770
Freight Paid		-	-570	=	-570
Discount given		-	174	=	-174
Closing Balance of inventory		-	-1400	=	1400
Total	7930		3378		3412