Question

Custom Auto Parts started this year with the following balances:

      Cash: $60,000

      Merchandise Inventory: $8,000

      Land: $12,000

      Accounts Payable: $0

      Common Stock: $50,000

      Retained Earnings: $30,000

During the year they had the following transactions:

Purchase $60,000 of merchandise inventory on account, terms 2/10,n/30.

The goods delivered in Event 1 were delivered FOB shipping point. Freight costs of $1,500 were paid in cash by the responsible party

Returned $3,000 of goods purchased in Event 1

Paid the balance due on the goods purchased in Event 1 and recorded the cash discount.

Recognized $59,000 of cash revenue from the sale of merchandise and recognized $45,000 of cost of goods sold from such sale.

The goods sold in Event 5 were delivered to the customers FOB destination. Freight costs of $1,400 were paid in cash by the responsible party.

Paid $9,000 in cash for selling and administrative expenses.

Sold the land for $14,500 in cash.

Using Excel, assuming a perpetual inventory system, record each transaction in the horizontal statements model.

After completing the recording of the transactions, prepare a multistep income statement. Include common size percentages on the income statement.

I need help with this part below!!

Event	Revenue	Capital Gain on Sale of Land	Cost of Goods Sold	Selling and Adminstrative	Transportation-Out		Net Income
1
2
3
4
5
6
7
8
	59000	0	-45000	0		0

Answer 1

Journal entries on each event
1. ON PURCHASE OF GOODS
Inventory a/c dr	60,000.00
To Account payable		60,000.00
2. Purchase return
Account payable a/c dr	3,000.00
to Inventory a/c		3,000.00
cash discount on payment Account payable a/c dr 1140 To Inventory 1140
3. on Frieght payment
Inventory a/c dr	1,500.00
To Account payable		1,500.00
4. when goods sold to customer
cash a/c dr	59,000.00
To revenue		59,000.00
5. cost of good sold
cost of good sold a/c dr	45,000.00
To inventory		45,000.00
6.sold of land
Cash a/c dr	14,500.00
To land		12,000.00
Toprofit on sales of land		1,500.00
7. frieght on Sale
No entry paid by customer

2. Income statement

Event		Revenue	Capital Gain on Sale of Land	Cost of Goods Sold	Selling and Adminstrative	Transportation-Out	Net Income	% of income
1	Opening stock			-8000			-8,000.00	-107%
2	purchase of goods			-61500			-61,500.00	-820%
3	Less:-purchase return			3000			3,000.00	40%
4	less cash discount			1170			1,170.00	16%
5	less Closing inventory			20330			20,330.00	271%
6	Sales of goods	59,000.00					59,000.00	787%
7	Capital gain on sold of land(14500-12000)		2500				2,500.00	33%
8	Selling and Adminstrative paid				-9000		-9,000.00	-120%
	Total	59,000.00	2500	-45000	-9000		7,500.00	100%