Question

#2 (10 points) Record each of these six transactions on the horizontal statements on the last page. a) On Feb. 1, Health Mart Company acquired $20,000 cash by issuing common stock. b) On Feb. 1, Health Mart Company purchases $10,000 of merchandise on account and is given the opportunity for a discount of 2/10 n/30. c) On Feb 2, Health Mart Company received the merchandise purchased in transaction (b) above. The shipping terms were FOB shipping point and Health Mart paid the freight company $500 cash for delivering the merchandise. d) On Feb. 8, Health Mart pays it's supplier for all the merchandise it purchased in transaction. (b) above. e) On Feb 10, Health Mart sold $5,000 of its merchandise inventory to a hospital for $8,000 on account. 1) On Feb 20, the hospital returned $2,000 of the $8,000 of merchandise it purchased from Health Mart in transaction (e) above. The returned merchandise had originally cost Health Mart $1,250.

Answer 1

Income statement - Expenses = Net Income Statement of Cash Flow Revenues HEALTH MART HORIZONTAL STATEMENTS Balance sheet = Liabilities + Stakeholders' Equity + Merchandise = Accounts + Common + Retained Inventory Payable Stock earning 20,000 Cash Assets Accounts Receivable + 20,000 10,000 10,000 (500) 500 (9,800) (10,000) (200) (10,000 X 2%) (5,000) Financing Activity Operating Activity Operating Activity Operating Activity 3,000 Operating Activity (750) Operating Activity 2,250 8,000 3,000 8,000 5,000 (2,000) 1,250 (750) (2,000) (1,250) Ending Bal. 9,700 + 6,000 + 6,550 = 0+ 20,000 + 2,250 6,000 -1 3,750 = 1