In: Accounting
1. | The business was started when it acquired $51,000 cash from the issue of common stock. |
2. | Northwest purchased $171,000 of merchandise for cash in 2016. |
3. | During the year, the company sold merchandise for $199,490. The merchandise cost $109,720. Sales were made under the following terms: |
a. | $ | 45,950 | Cash sales | |
b. | 142,080 | Credit card sales (The credit card company charges a 1.25 percent service fee.) | ||
c. | 11,460 | Sales on account | ||
4. | The company collected all the amount receivable from the credit card company. | ||||
5. | The company collected $10,543 of accounts receivable. | ||||
6. | The company paid $43,494 cash for selling and administrative expenses. | ||||
7. |
Determined that 4.50 percent of the ending accounts receivable balance would be uncollectible.
|
General Journal |
Dr ($) |
Cr ($) |
Working , if any |
Cash |
51000 |
[received] |
|
Common Stock |
51000 |
||
Inventory |
171000 |
[purchased] |
|
Cash |
171000 |
||
Cash |
186254 |
[45950 + (142080-1.25%] |
|
Accounts receivables |
11460 |
[given] |
|
Charges |
1776 |
[142080 x 1.25%] |
|
Sales Revenue |
199490 |
||
Cost of Goods Sold |
109720 |
[given] |
|
Inventory |
109720 |
||
Cash |
10543 |
[cash received] |
|
Accounts receivables |
10543 |
||
Selling & administrative expenses |
43494 |
||
Cash |
43494 |
||
Bad Debt expenses |
41 |
[11460-10543] x 4.5% |
|
Allowances for doubtful accounts |
41 |
Sales Revenue |
199490 |
(-) Cost of Goods Sold |
109720 |
Gross Profits |
$89770 |
(-) Charges |
1776 |
(-) Bad debt expenses |
41 |
(-) Selling & admin expenses |
43494 |
Net Income |
$44,459 |
Common Stock |
Retained Earnings |
Total Stockholder's equity |
|
Beginning Balance |
0 |
0 |
0 |
Add: Issue |
51000 |
51000 |
|
Add: Net Income |
44459 |
44459 |
|
Ending cash balance |
$51000 |
$44459 |
$95459 |
ASSETS |
||
Current Assets: |
||
Cash [51000-171000+186254+10543-43494] |
33303 |
|
Inventory |
61280 |
|
Accounts receivables |
917 |
|
Less: Allowance for doubtful accounts |
41 |
876 |
Total Current Assets/ASSETS |
$95,459 |
|
LIABILITIES & STOCKHOLDERS Equity |
||
Common Stock |
51000 |
|
Retained Earnings |
44459 |
|
Total Liabilities & Stockholder's Equity |
$95,459 |
Net Income |
44459 |
|
Increase in Inventory |
-61280 |
|
Increase in Accounts receivables |
-876 |
|
A. Cash flow from Operating Activities |
-17697 |
|
B. Cash flow from Investing Activity |
0 |
|
Cash flow from Financing Activity |
||
Issue of Common Stock |
51000 |
|
C. Cash flow from Financing activities |
51000 |
|
Increase in Cash |
$33,303 |
|
Add: Beginning cash balance |
0 |
|
Cash at the end |
$33,303 |