Comprehensive cycle problem: Periodic system (Appendix)The following trial balance pertain...

Comprehensive cycle problem: Periodic system (Appendix)

The following trial balance pertains to Nate’s Grocery as of January 1, 2012:

The following events occurred in 2012. Assume that Nate’s uses the periodic inventory method.

1.Purchased land for $9,000 cash.

2.Purchased merchandise on account for $96,000, terms 1/10n/45.

3.Paid freight of $1,000 cash on merchandise purchased FOB shipping point.

4.Returned $3,600 of defective merchandise purchased in Event 2.

5.Sold merchandise for $86,000 cash.

6.Sold merchandise on account for $90,000, terms 2/10 n/30.

7.Paid cash within the discount period on accounts payable due on merchandise purchased in Event 2.Paid $11,600 cash for selling expenses.

8.Collected $50,000 of the accounts receivable from Event 6 within the discount period.

9.Collected $40,000 of the accounts receivable but not within the discount period.

10.Paid $6,400 of other operating expenses.

11.A physical count indicated that $47,600 of inventory was on hand at the end of the accounting period.

Required

a. Record the above transactions in a horizontal statements model like the following one.

b. Prepare a schedule of cost of goods sold and an income statement