MBA560 Financial and Managerial Accounting: P3-28 The following trial balance pertains to Nate’s

MBA560 Financial and Managerial Accounting
Problem 3-28 Comprehensive cycle problem: Periodic system
The following trial balance pertains to Nate’s Grocery as of January 1, 2012: Account Title Beginning Balances Cash 26,000 Accounts 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 $86,000 cash.
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 account 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 like the following one.
b. Prepare a schedule of cost of goods sold and an income statement.
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