MBA560 Financial and Managerial Accounting: P3-24 The following events were completed by Chan

MBA560 Financial and Managerial Accounting

Problem 3-24 Effect of purchase returns and allowances and purchase discounts on the financial statements: perpetual system The following events were completed by Chan’s Imports in September 2012.
Sept. 1 Acquired $60,000 cash from the issue of common stock.
1 Purchased $36,000 of merchandise on account with terms 2/10, n/30.
5 Paid $800 cash for freight to obtain merchandise purchased on September 1.
8 Sold merchandise that cost $20,000 to customers for $38,000 on account, with terms 2/10, n/30.
8 Returned $1,500 of defective merchandise from the September 1 purchase to the supplier.
10 Paid cash for the balance due on the merchandise purchased on September 1.
20 Received cash from customers of September 8 sale in settlement of the account balances, but not within the discount period.
30 Paid $4,900 cash for selling expenses.

Required
a. Record each event in a statements model like the following one. The first event is recorded as an example.
b. Prepare an income statement for the month ending September 30.
c. Prepare a statement of cash flows for the month ending September 30.
d. Explain why there is a difference between net income and cash flow from operating activities.
Powered by