Chapter 3, Problem 28P

Comprehensive cycle problem: Periodic system (Appendix)

The following trial balance pertains to Benji’s Grocery as of January 1, 2018:

The following events occurred in 2018. Assume that Benji’s uses the periodic inventory method.

1. Purchased land for $30,000 cash.

2. Purchased merchandise on account for $230,000, terms 1/10, n/45.

3. Paid freight of $2,100 cash on merchandise purchased FOB shipping point.

4. Returned $8,600 of defective merchandise purchased in Event 2.

5. Sold merchandise for $186,000 cash.

6. Sold merchandise on account for $236,000, terms 2/10, n/30.

7. Paid cash within the discount period on accounts payable due on merchandise purchased in Event 2.

8. Paid $28,500 cash for selling expenses.

9. Collected $156,000 of the accounts receivable from Event 6 within the discount period.

10. Collected $56,000 of the accounts receivable but not within the discount period.

11. Paid $17,100 of other operating expenses.

12. A physical count indicated that $48,300 of inventory was on hand at the end of the accounting period.

Required

a. Record these transactions in a horizontal statements model like the following one.

b. Prepare a schedule of cost of goods sold and an income statement.