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the Jeater Company had the following balances

Price: $2.50

Problem 3-25 Comprehensive cycle problem: Perpetual system
At the beginning of 2012, the Jeater Company had the following balances in its accounts:

Cash 4300
Inventory 9000
Common stock 10000
Retained earnings 3,300

During 2012, the company experienced the following events.
1. Purchased inventory that cost $2,200 on account from Blue Company under terms 1y10, ny30.
The merchandise was delivered FOB shipping point. Freight costs of $110 were paid in cash.
2. Returned $200 of the inventory that it had purchased because the inventory was damaged in
transit. The freight company agreed to pay the return freight cost.
3. Paid the amount due on its account payable to Blue Company within the cash discount period.
4. Sold inventory that had cost $3,000 for $5,500 on account, under terms 2y10, ny45.
5. Received merchandise returned from a customer. The merchandise originally cost $400 and
was sold to the customer for $710 cash during the previous accounting period. The customer
was paid $710 cash for the returned merchandise.
6. Delivered goods FOB destination in Event 4. Freight costs of $60 were paid in cash.
7. Collected the amount due on the account receivable within the discount period.
8. Took a physical count indicating that $7,970 of inventory was on hand at the end of the
accounting period.

a. Identify these events as asset source (AS), asset use (AU), asset exchange (AE), or claims
exchange (CE).
b. Record each event in a statements model like the following one.
c. Prepare an income statement, a statement of changes in stockholders’ equity, a balance
sheet, and a statement of cash flows

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