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In: Accounting

The following events were completed by Dana’s Imports in September 2018: Sept. 1 Acquired $54,000 cash...

The following events were completed by Dana’s Imports in September 2018:

Sept. 1 Acquired $54,000 cash from the issue of common stock.
1 Purchased $35,000 of merchandise on account with terms 2/10, n/30.
5 Paid $1,000 cash for freight to obtain merchandise purchased on September 1.
8 Sold merchandise that cost $12,500 to customers for $18,000 on account, with terms 2/10, n/30.
8 Returned $1,100 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.
20 Received cash from customers of September 8 sale in settlement of the account balances, but not within the discount period.
30 Paid $3,450 cash for selling expenses.

Required

  1. 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, or NC for net change in cash. If the element is not affected by the event, leave the cell blank. The first event is recorded as an example.

  2. Prepare an income statement for the month ending September 30.

  3. Prepare a statement of cash flows for the month ending September 30.

A.

DANA'S IMPORTS
Effect of Transactions on Financial Statements Using Horizontal Statements Model
Date Balance Sheet Income Statement Statement of Cash Flows
Assets = Liabilities + Stockholders’ Equity Revenue – Expenses = Net Income
Cash + Accounts Receivable + Inventory = Accounts Payable + Common Stock + Retained Earnings
9/1 54,000 + + = + 54,000 + – = 54,000 FA
9/1 + + = + + – =
9/5 + + = + + – =
9/8a. + + = + + – =
9/8b. + + = + + – =
9/8c. + + = + + – =
9/10 + + = + + – =
9/20 + + = + + – =
9/30 + + = + + – =
Total + + = + + – =

B.

Prepare an income statement for the month ending September 30.

DANA'S IMPORTS
Income Statement
For the Month Ended September 30, 2018
Operating expenses

C.

Prepare a statement of cash flows for the month ending September 30. (Enter cash outflows as negative amounts.)
DANA'S IMPORTS
Statement of Cash Flows
For the Month ended September 30, 2018
Cash flows from operating activities      
Net cash flow from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net cash flow from financing activities
Net change in cash
Ending cash balance

Solutions

Expert Solution

ekkarill92 answered 1 year ago
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