I cannot figure out what is incorrect in what I did. I don't
understand what the red x's are for!
Homework Answers
Solution A:
| Dan Watson Merchandising | ||||||||||||||
| Horizontal Statement Model | ||||||||||||||
| Event | Balance Sheet | Income Statement | Statement of Cash Flows | |||||||||||
| Assets | = | Stockholder's Equity | Revenue | - | Expense | = | Net Income | |||||||
| Cash | + | Inventory | = | Common Stock | + | Retained Earnings | ||||||||
| 1 | $30,000.00 | + | $0.00 | = | $30,000.00 | + | $0.00 | $0.00 | - | $0.00 | = | $0.00 | $30,000.00 | FA |
| 2 | -$18,000.00 | + | $18,000.00 | = | $0.00 | + | $0.00 | $0.00 | - | $0.00 | = | $0.00 | -$18,000.00 | OA |
| 3a | $32,000.00 | + | $0.00 | = | $0.00 | + | $32,000.00 | $32,000.00 | - | $0.00 | = | $32,000.00 | $32,000.00 | OA |
| 3b | $0.00 | + | -$15,000.00 | = | $0.00 | + | -$15,000.00 | $0.00 | - | $15,000.00 | = | -$15,000.00 | $0.00 | NA |
| Total | $44,000.00 | + | $3,000.00 | = | $30,000.00 | + | $17,000.00 | $32,000.00 | - | $15,000.00 | = | $17,000.00 | $44,000.00 | NC |
Solution B:
| Dan Watson Merchandising | |
| Income Statement | |
| Particulars | Amount |
| Revenue | $32,000.00 |
| Cost of goods sold | $15,000.00 |
| Gross Profit | $17,000.00 |
| Operating expenses | $0.00 |
| Net Income | $17,000.00 |
Solution C:
Total Assets = $44,000 + $3,000 = $47,000
Add Answer to:
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Purchased inventory for $18,000 cash.
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Dan Watson started a small merchandising business in 2018. The
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operation. Assume that Watson uses the perpetual inventory
system.
Acquired $30,000 cash from the issue of common stock.
Purchased inventory for $18,000 cash.
Sold inventory costing $15,000 for $32,000 cash.
Required
Record the events in a horizontal statement model. In the Cash Flow
column, use OA to designate operating activity, IA for investment
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Acquired $18,500 cash from the issue of common stock.
Purchased inventory for $6,500 cash.
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Paid $950 for advertising expense.
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