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Periodic Inventory Method

Nate's Grocery as January 1, 2012. The following events occurred in 2012. Assume that Nate's uses the periodic inventory method.

Comprehensive cycle problem: period system (Appendix)
The following trial balance pertains to Nate's Grocery as January 1, 2012.

Account Title Beginning Balances
Cash $26,000
Account receivable 4,000
Merchandise inventory 50,000
Accounts payable 4,000
Common Stock 43,000 Retained earnings 33,000
Totals $80,000

The following events occurred in 2012. Assume that Nate's uses the periodic inventory method.
1. Purchased land for $9,000 cash
2. Purchased merchandise on account for $96,000, terms 1/10 n/45.
3. Paid freight of $1,000 cash on merchandise purchased FOB shipping point.
4. Returned $3,600 of defective merchandise purchased in Event 2.
5. Sold merchandise for$86,000
6. Sold merchandise on account for $90,000, terms 2/10 n/30.
7. Paid cash within the discount period on accounts payable due on merchandise purchased in Event 2.
8. Paid $11,600 cash for selling expenses.
9. Collected $50,000 of the accounts receivable from Event 6 within the discount period.
10. Collected $40,000 of the accounts receivable but not within the discount period.
11. Paid $6,400 of other operating expenses.
12. A physical count indicated that $47,600 of inventory was on hand at the end of the accounting period.

Required
a. Record the above transactions in a horizontal statements model on the template
b. Prepare a schedule of cost of goods sold and an income statement.

Attachments

Solution Summary

A periodic inventory method is determined.

$2.19