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On January 1, 2021, CMoore 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 $138,250 cash to purchase inventory. 1. $175,000 cash. 2. 3 Sold merchandise that cost $70,000 for $157,500 on account. $35,000 for operating expenses. $10,500 of inventory Collected $140,000 cash from accounts receivable. 4 Paid Wrote off 6 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 CMoore sold inventory for $ 3. $ 157,500 he will be able to recover more than 20% of the 175,000 he invested in the stock. Do you agree with this statement? Why or why not? Hint : Think Net Income generated by business activity in the period compared to the original investment

On January 1, 2021, CMoore 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 $138,250 cash to purchase inventory. 1. $175,000 cash. 2. 3 Sold merchandise that cost $70,000 for $157,500 on account. $35,000 for operating expenses. $10,500 of inventory Collected $140,000 cash from accounts receivable. 4 Paid Wrote off 6 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 CMoore sold inventory for $ 3. $ 157,500 he will be able to recover more than 20% of the 175,000 he invested in the stock. Do you agree with this statement? Why or why not? Hint : Think Net Income generated by business activity in the period compared to the original investment

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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Please with explanation or examples.Maybe about dividends. But I do not quite understand. Question 3. Thanks
**Accounting Events and Financial Statement Preparation** On January 1, 2021, CMoore started a business. The company experienced the following accounting events during its first year of operations: 1. **Capital Investment** - Started the business by issuing common stock for $175,000 in cash. 2. **Inventory Purchase** - Paid $138,250 in cash to purchase inventory. 3. **Merchandise Sales** - Sold merchandise that cost $70,000 for $157,500, with the sale made on account. 4. **Operating Expenses** - Paid $35,000 for operating expenses. 5. **Inventory Write-off** - Wrote off $10,500 of inventory. 6. **Accounts Receivable Collection** - Collected $140,000 in cash from accounts receivable. **Required Tasks** 1. **Transaction Recording** - Record the preceding transactions using the horizontal statements model. 2. **Financial Statements Preparation** - Prepare an income statement, a balance sheet, and a statement of cash flows. 3. **Investment Recovery Analysis** - Given CMoore sold inventory for $157,500, analyze if he can recover more than 20% of the $175,000 he invested in the stock. Provide reasoning to support your conclusion. > **Hint:** Focus on the net income generated by business activities during the period in relation to the original investment.
Transcribed Image Text:**Accounting Events and Financial Statement Preparation** On January 1, 2021, CMoore started a business. The company experienced the following accounting events during its first year of operations: 1. **Capital Investment** - Started the business by issuing common stock for $175,000 in cash. 2. **Inventory Purchase** - Paid $138,250 in cash to purchase inventory. 3. **Merchandise Sales** - Sold merchandise that cost $70,000 for $157,500, with the sale made on account. 4. **Operating Expenses** - Paid $35,000 for operating expenses. 5. **Inventory Write-off** - Wrote off $10,500 of inventory. 6. **Accounts Receivable Collection** - Collected $140,000 in cash from accounts receivable. **Required Tasks** 1. **Transaction Recording** - Record the preceding transactions using the horizontal statements model. 2. **Financial Statements Preparation** - Prepare an income statement, a balance sheet, and a statement of cash flows. 3. **Investment Recovery Analysis** - Given CMoore sold inventory for $157,500, analyze if he can recover more than 20% of the $175,000 he invested in the stock. Provide reasoning to support your conclusion. > **Hint:** Focus on the net income generated by business activities during the period in relation to the original investment.
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