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123456 2. On January 1, 2021, Tom R started a business The company had the following accounting events during the first year of operation. Started the business by issuing common stock for Paid $197,500 cash to purchase inventory. Sold merchandise that cost Paid Wrote off Collected $250,000 cash. $100,000 for $225,000 on account. $50,000 for operating expenses. $15,000 of inventory $200,000 cash from accounts receivable. REQUIRED 1. Record the preceding transactions in the horizontal statements model. 2. Prepare an income statement, a balance sheet, and a statement of cash flows. Since Tom R sold inventory for 3. $ Hint: Think Net Income generated by business activity in the period compared to the original investment $ 225,000 he will be able to recover more than 20% of the 250,000 he invested in the stock. Do you agree with this statement? Why or why not?

123456 2. On January 1, 2021, Tom R started a business The company had the following accounting events during the first year of operation. Started the business by issuing common stock for Paid $197,500 cash to purchase inventory. Sold merchandise that cost Paid Wrote off Collected $250,000 cash. $100,000 for $225,000 on account. $50,000 for operating expenses. $15,000 of inventory $200,000 cash from accounts receivable. REQUIRED 1. Record the preceding transactions in the horizontal statements model. 2. Prepare an income statement, a balance sheet, and a statement of cash flows. Since Tom R sold inventory for 3. $ Hint: Think Net Income generated by business activity in the period compared to the original investment $ 225,000 he will be able to recover more than 20% of the 250,000 he invested in the stock. Do you agree with this statement? Why or why not?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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123456 1. 2. On January 1, 2021, Tom R started a business The company had the following accounting events during the first year of operation. Started the business by issuing common stock for Paid $197,500 cash to purchase inventory. Sold merchandise that cost Paid Wrote off Collected $250,000 cash. $100,000 for $225,000 on account. $50,000 for operating expenses. $15,000 of inventory $200,000 cash from accounts receivable. REQUIRED 1. Record the preceding transactions in the horizontal statements model. 2. Prepare an income statement, a balance sheet, and a statement of cash flows. 3. Since Tom R sold inventory for $ Hint: Think Net Income generated by business activity in the period compared to the original investment $ 225,000 he will be able to recover more than 20% of the 250,000 he invested in the stock. Do you agree with this statement? Why or why not?
Transcribed Image Text:123456 1. 2. On January 1, 2021, Tom R started a business The company had the following accounting events during the first year of operation. Started the business by issuing common stock for Paid $197,500 cash to purchase inventory. Sold merchandise that cost Paid Wrote off Collected $250,000 cash. $100,000 for $225,000 on account. $50,000 for operating expenses. $15,000 of inventory $200,000 cash from accounts receivable. REQUIRED 1. Record the preceding transactions in the horizontal statements model. 2. Prepare an income statement, a balance sheet, and a statement of cash flows. 3. Since Tom R sold inventory for $ Hint: Think Net Income generated by business activity in the period compared to the original investment $ 225,000 he will be able to recover more than 20% of the 250,000 he invested in the stock. Do you agree with this statement? Why or why not?
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