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
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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F67a79aa2-f715-406c-8bee-8178252bb86d%2F6476076c-c1da-46ff-99fc-1b9789830541%2F8brtqbp_processed.jpeg&w=3840&q=75)
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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