Exercise 4-5 (Algo) Record transactions and calculate financial statement amounts LO 2, 6, 7 The transactions relating to the formation of Blue Co. Stores Inc., and its first month of operations follow. The firm was organized and the stockholders invested cash of $8,900. The firm borrowed $4,800 from the bank; a short-term note was signed. Display cases and other store equipment costing $1,650 were purchased for cash. The original list price of the equipment was $1,940, but a discount was received because the seller was having a sale. A store location was rented, and $1,500 was paid for the first month's rent. Inventory of $14,400 was purchased; $8,500 cash was paid to the suppliers, and the balance will be paid within 60 days. During the first week of operations, merchandise that had cost $4,300 was sold for $6,200 cash. A newspaper ad costing $120 was arranged for; it ran during the second week of the store's operations. The ad will be paid for in the next month. Additional inventory costing $4,150 was purchased; cash of $1,300 was paid, and the balance is due in 30 days. In the last three weeks of the first month, sales totaled $13,250, of which $9,300 was sold on account. The cost of the goods sold totaled $8,400. Employee wages for the month totaled $1,900; these will be paid during the first week of the next month. The firm collected a total of $3,350 from the sales on account recorded in transaction i. The firm paid a total of $4,600 of the amount owed to suppliers from transaction e. Required: Record each transaction in the appropriate columns. Indicate the financial statement effect. Calculate the total assets, liabilities, and stockholders' equity at the end of the month and calculate the amount of net income for the month. After completing parts a through l, prepare an income statement for Blue Co. Stores Inc. for the month presented and a balance sheet at the end of the month.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Exercise 4-5 (Algo) Record transactions and calculate financial statement amounts LO 2, 6, 7

The transactions relating to the formation of Blue Co. Stores Inc., and its first month of operations follow.

The firm was organized and the stockholders invested cash of $8,900.
The firm borrowed $4,800 from the bank; a short-term note was signed.
Display cases and other store equipment costing $1,650 were purchased for cash. The original list price of the equipment was $1,940, but a discount was received because the seller was having a sale.
A store location was rented, and $1,500 was paid for the first month's rent.
Inventory of $14,400 was purchased; $8,500 cash was paid to the suppliers, and the balance will be paid within 60 days.
During the first week of operations, merchandise that had cost $4,300 was sold for $6,200 cash.
A newspaper ad costing $120 was arranged for; it ran during the second week of the store's operations. The ad will be paid for in the next month.
Additional inventory costing $4,150 was purchased; cash of $1,300 was paid, and the balance is due in 30 days.
In the last three weeks of the first month, sales totaled $13,250, of which $9,300 was sold on account. The cost of the goods sold totaled $8,400.
Employee wages for the month totaled $1,900; these will be paid during the first week of the next month.
The firm collected a total of $3,350 from the sales on account recorded in transaction i.
The firm paid a total of $4,600 of the amount owed to suppliers from transaction e.

Required:

Record each transaction in the appropriate columns. Indicate the financial statement effect.
Calculate the total assets, liabilities, and stockholders' equity at the end of the month and calculate the amount of net income for the month.
After completing parts a through l, prepare an income statement for Blue Co. Stores Inc. for the month presented and a balance sheet at the end of the month.

Complete this question by entering your answers in the tabs below.
Required A
Required B
Required C1 Required C2
Record each transaction in the appropriate columns. Indicate the financial statement effect. (Enter decreases with a minus sign to ind
ASSETS
LIABILITIES
STOCKHOLDERS' EQUITY
Transaction
Accounts
Merchandise
Notes
Accounts
Paid-in
Retained
Cash
+ Receivable +
Inventory
Equipment = Payable + Payable + Capital + Earnings + Revenue
a.
b.
C.
d.
е.
f.
g.
h.
i.
j.
k.
I.
+
+
+
+
+
Required A
Required B >

Expert Solution

Step 1

Income Statement

The purpose of preparing the income statement is to know the net income which are derived at the end of the period as well.

Balance Sheet

The purpose of preparing the balance sheet is to know the actual position of assets liabilities and equity as well

Trending now

This is a popular solution!

Step by step

Solved in 5 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.