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Record the above events in a horizontal statements model b. Prepare a multistep income statement

Record the above events in a horizontal statements model b. Prepare a multistep income statement

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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The KM Company experienced the following events for the year 2022: 1. Acquired $80,000 cash from the issue of common stock. 2. Purchased $50,000 inventory on account. 3. Received goods purchased in event 2, FOB shipping point: freight cost of $1,000 paid in cash. 4. Sold inventory on account cost $40,000 for $85,000. 5. Freight cost on the goods sold in event 4 was $760. The goods were shipped FOB destination. Cash was paid for the freight cost. 6. Customer in the event 4 returned goods $5,000 worth of goods that had a cost of $2,500. 7. Collected $50,000 cash from accounts receivable. 8. Paid $30,500 cash on accounts payable. 9. Paid $4,000 cash for advertising expense. 10. Paid $3,000 cash for General expense. Required: Record the above events in a horizontal statements model b. Prepare a multistep income statement a.
Transcribed Image Text:The KM Company experienced the following events for the year 2022: 1. Acquired $80,000 cash from the issue of common stock. 2. Purchased $50,000 inventory on account. 3. Received goods purchased in event 2, FOB shipping point: freight cost of $1,000 paid in cash. 4. Sold inventory on account cost $40,000 for $85,000. 5. Freight cost on the goods sold in event 4 was $760. The goods were shipped FOB destination. Cash was paid for the freight cost. 6. Customer in the event 4 returned goods $5,000 worth of goods that had a cost of $2,500. 7. Collected $50,000 cash from accounts receivable. 8. Paid $30,500 cash on accounts payable. 9. Paid $4,000 cash for advertising expense. 10. Paid $3,000 cash for General expense. Required: Record the above events in a horizontal statements model b. Prepare a multistep income statement a.
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