Question

The following events were completed by Dana’s Imports in September 2018: Sept. 1 Acquired $46,000 cash from the issue of common stock. 1 Purchased $31,000 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 $10,500 to customers for $17,500 on account, with terms 2/10, n/30. 8 Returned $650 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 $3,050 cash for selling expenses.

Answer 1

1.

Date	Balance Sheet								Income Statement
	Assets			=	Liabilities	+	Stockholders' Equity		Revenue	-	Expenses	=	Net Income	Statement of Cash Flows
	Cash	Accounts Receivable	Inventory	=	Accounts Payable	+	Common Stock	Retained Earnings
9/1	46000			=		+	46000			-		=		46000	FA
9/1			31000	=	31000	+				-		=			NA
9/5	-1000		1000	=		+				-		=		-1000	OA
9/8a.			-10500	=		+		-10500		-	10500	=	-10500		NA
9/8b.		17500		=		+		17500	17500	-		=	17500		NA
9/8c.			-650	=	-650	+				-		=			NA
9/10	-29743		-607	=	-30350	+				-		=		-29743	OA
9/20	17500	-17500		=		+				-		=		17500	OA
9/30	-3050			=		+		-3050		-	3050	=	-3050	-3050	OA
Total	29707	0	20243	=	0	+	46000	3950	17500	-	13550	=	3950	29707	NC

2.

DANA'S IMPORTS
Income Statement
For the Month Ended September 30, 2018
Sales revenue	17500
Cost of goods sold	10500
Gross profit	7000
Operating expenses
Selling expenses	3050
Net income	3950

3.

DANA'S IMPORTS
Income Statement
For the Month Ended September 30, 2018
Cash flows from operating activities
Cash receipt from customers	17500
Cash paid for merchandise inventory	-29743
Cash paid for freight	-1000
Cash paid for selling expenses	-3050
Net cash flow from operating activities		-16293
Cash flows from investing activities		0
Cash flows from financing activities
Issuance of common stock	46000
Net cash flow from financing activities		46000
Net change in cash		29707
Beginning cash balance		0
Ending cash balance		29707