| The trial balance for Terry’s Auto Shop as of January 1, 2016, follows: |
| Account Titles | Debit | Credit | ||||
| Cash | $ | 6,180 | ||||
| Inventory | 3,130 | |||||
| Common Stock | $ | 7,350 | ||||
| Retained Earnings | 1,960 | |||||
| | | | | | | |
| Total | $ | 9,310 | $ | 9,310 | ||
| | | | | | | |
| | ||||||
| The following events affected the company during the 2016 accounting period: |
| 1. | Purchased merchandise on account that cost $4,240. |
| 2. | The goods in Event 1 were purchased FOB shipping point with freight cost of $295 cash. |
| 3. | Returned $410 of damaged merchandise for credit on account. |
| 4. |
Agreed to keep other damaged merchandise for which the company received an $295 allowance.
|
| 5. | Sold merchandise that cost $2,640 for $4,920 cash. |
| 6. |
Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $105 cash.
|
| 7. | Paid $2,940 on the merchandise purchased in Event 1. |
Required
| a. |
Record the events in general journal format.
| |
b. Open general ledger T-accounts with the appropriate beginning balances, and post the journal entries to the T-accounts.
c. Prepare an income statement, balance sheet, and statement of cash flows. (Assume that closing entries have been made.)
Thank you!
