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The beginning account balances for Terry's Auto Shop as of January 1, Year 2, follow: Account Titles Cash Beginning Balances Inventory Common Stock $ 6,080 3,080 7,490 1,670 Retained Earnings The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $4,200. 2. The goods in Event 1 were purchased FOB shipping point with freight cost of $275 cash. 3. Returned $480 of damaged merchandise for credit on account. 4. Agreed to keep other damaged merchandise for which the company received a $290 allowance. 5. Sold merchandise that cost $2,570 for $4,860 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $175 cash. 7. Paid $2,910 on the merchandise purchased in Event 1. Required a. Organize appropriate ledger accounts under an accounting equation. Record the beginning balances and the transaction data in the accounts. In the last column of the tale, provide appropriate account titles for the Retained Earnings amounts. Note: Enter any decreases to account balances with a minus sign. If there is no effect on the Accounts Titles for Retained Earnings, leave the cell blank. Not every cell will require entry. Answer is not complete. TERRY'S AUTO SHOP Effect of Events on the Financial Statements Assets = Liabilities + Stockholders' Equity Events Accounts Cash + Inventory = + Payable Common Stock + Retained Earnings Account Titles for Retained Earnings Beginning Balance 6,080 + 3,080 = + 7,490 + 1,670 1. + 4,200 = 4,200 + + 2. (275) + 275 = + + 3. + (480) = (480) ✓ + + 4. + (290) = (290) + + 5a. 4,860 + (2,570) X = + + 5b. + = 6. (175) + + + + 2,290 + 175 X 7. (2,910) + = (2,910) + + Ending Balance 7,580 + 4,215 = 520 + 7,490 + 4,135

The beginning account balances for Terry's Auto Shop as of January 1, Year 2, follow: Account Titles Cash Beginning Balances Inventory Common Stock $ 6,080 3,080 7,490 1,670 Retained Earnings The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $4,200. 2. The goods in Event 1 were purchased FOB shipping point with freight cost of $275 cash. 3. Returned $480 of damaged merchandise for credit on account. 4. Agreed to keep other damaged merchandise for which the company received a $290 allowance. 5. Sold merchandise that cost $2,570 for $4,860 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $175 cash. 7. Paid $2,910 on the merchandise purchased in Event 1. Required a. Organize appropriate ledger accounts under an accounting equation. Record the beginning balances and the transaction data in the accounts. In the last column of the tale, provide appropriate account titles for the Retained Earnings amounts. Note: Enter any decreases to account balances with a minus sign. If there is no effect on the Accounts Titles for Retained Earnings, leave the cell blank. Not every cell will require entry. Answer is not complete. TERRY'S AUTO SHOP Effect of Events on the Financial Statements Assets = Liabilities + Stockholders' Equity Events Accounts Cash + Inventory = + Payable Common Stock + Retained Earnings Account Titles for Retained Earnings Beginning Balance 6,080 + 3,080 = + 7,490 + 1,670 1. + 4,200 = 4,200 + + 2. (275) + 275 = + + 3. + (480) = (480) ✓ + + 4. + (290) = (290) + + 5a. 4,860 + (2,570) X = + + 5b. + = 6. (175) + + + + 2,290 + 175 X 7. (2,910) + = (2,910) + + Ending Balance 7,580 + 4,215 = 520 + 7,490 + 4,135

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter11: The Statement Of Cash Flows
Section: Chapter Questions
Problem 37E: Analyzing the Accounts Casey Company uses a perpetual inventory system and engaged in the following...
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The beginning account balances for Terry's Auto Shop as of January 1, Year 2, follow: Account Titles Cash Beginning Balances Inventory Common Stock $ 6,080 3,080 7,490 1,670 Retained Earnings The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $4,200. 2. The goods in Event 1 were purchased FOB shipping point with freight cost of $275 cash. 3. Returned $480 of damaged merchandise for credit on account. 4. Agreed to keep other damaged merchandise for which the company received a $290 allowance. 5. Sold merchandise that cost $2,570 for $4,860 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $175 cash. 7. Paid $2,910 on the merchandise purchased in Event 1. Required a. Organize appropriate ledger accounts under an accounting equation. Record the beginning balances and the transaction data in the accounts. In the last column of the tale, provide appropriate account titles for the Retained Earnings amounts. Note: Enter any decreases to account balances with a minus sign. If there is no effect on the Accounts Titles for Retained Earnings, leave the cell blank. Not every cell will require entry. Answer is not complete. TERRY'S AUTO SHOP Effect of Events on the Financial Statements Assets = Liabilities + Stockholders' Equity Events Accounts Cash + Inventory = + Payable Common Stock + Retained Earnings Account Titles for Retained Earnings Beginning Balance 6,080 + 3,080 = + 7,490 + 1,670 1. + 4,200 = 4,200 + + 2. (275) + 275 = + + 3. + (480) = (480) ✓ + + 4. + (290) = (290) + + 5a. 4,860 + (2,570) X = + + 5b. + = 6. (175) + + + + 2,290 + 175 X 7. (2,910) + = (2,910) + + Ending Balance 7,580 + 4,215 = 520 + 7,490 + 4,135
Transcribed Image Text:The beginning account balances for Terry's Auto Shop as of January 1, Year 2, follow: Account Titles Cash Beginning Balances Inventory Common Stock $ 6,080 3,080 7,490 1,670 Retained Earnings The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $4,200. 2. The goods in Event 1 were purchased FOB shipping point with freight cost of $275 cash. 3. Returned $480 of damaged merchandise for credit on account. 4. Agreed to keep other damaged merchandise for which the company received a $290 allowance. 5. Sold merchandise that cost $2,570 for $4,860 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $175 cash. 7. Paid $2,910 on the merchandise purchased in Event 1. Required a. Organize appropriate ledger accounts under an accounting equation. Record the beginning balances and the transaction data in the accounts. In the last column of the tale, provide appropriate account titles for the Retained Earnings amounts. Note: Enter any decreases to account balances with a minus sign. If there is no effect on the Accounts Titles for Retained Earnings, leave the cell blank. Not every cell will require entry. Answer is not complete. TERRY'S AUTO SHOP Effect of Events on the Financial Statements Assets = Liabilities + Stockholders' Equity Events Accounts Cash + Inventory = + Payable Common Stock + Retained Earnings Account Titles for Retained Earnings Beginning Balance 6,080 + 3,080 = + 7,490 + 1,670 1. + 4,200 = 4,200 + + 2. (275) + 275 = + + 3. + (480) = (480) ✓ + + 4. + (290) = (290) + + 5a. 4,860 + (2,570) X = + + 5b. + = 6. (175) + + + + 2,290 + 175 X 7. (2,910) + = (2,910) + + Ending Balance 7,580 + 4,215 = 520 + 7,490 + 4,135
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