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Jan. 8. Sold merchandise on account, $20,000, terms FOB destination, 1/10, n/30. The cost of merchandise sold was $14,000. Balance Sheet Assets Liabilities Stockholders' Equity + Accounts Receivable v Inventory v No Effect v Retained Earnings 20,000 x -14,000 V 6,000 x Jan. 8. Statement of Cash Flows Income Statement No effect v Sales v 20,000 x Cost of goods sold v -14,000 Gross profit 6,000 x

Jan. 8. Sold merchandise on account, $20,000, terms FOB destination, 1/10, n/30. The cost of merchandise sold was $14,000. Balance Sheet Assets Liabilities Stockholders' Equity + Accounts Receivable v Inventory v No Effect v Retained Earnings 20,000 x -14,000 V 6,000 x Jan. 8. Statement of Cash Flows Income Statement No effect v Sales v 20,000 x Cost of goods sold v -14,000 Gross profit 6,000 x

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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Question

The selected transactions below were completed by Affordable Supplies Co., which sells supplies primarily to wholesalers and occasionally to retail customers.

Instructions:

Illustrate the effects of each of the transactions on the accounts and financial statements of Affordable Supplies Co.

If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases, cash outflows, and the income statement effects that reduce gross profit as negative amounts.

 

Jan. 8. Sold merchandise on account, $20,000, terms FOB destination, 1/10, n/30. The cost of merchandise sold was $14,000. Balance Sheet Assets Liabilities Stockholders' Equity Accounts Receivable v Inventory v No Effect v Retained Earnings v + = 20,000 x -14,000 v 6,000 x Jan. 8. Statement of Cash Flows Income Statement No effect v Sales v 20,000 x Cost of goods sold v -14,000 Gross profit 6,000 x
Transcribed Image Text:Jan. 8. Sold merchandise on account, $20,000, terms FOB destination, 1/10, n/30. The cost of merchandise sold was $14,000. Balance Sheet Assets Liabilities Stockholders' Equity Accounts Receivable v Inventory v No Effect v Retained Earnings v + = 20,000 x -14,000 v 6,000 x Jan. 8. Statement of Cash Flows Income Statement No effect v Sales v 20,000 x Cost of goods sold v -14,000 Gross profit 6,000 x
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