Question

Requirement A:

 EXPERT COMPUTERS Horizontal Statements Model for Year 1 Event Assets = Liabilities + Stockholders' Equity Income Statement Statement of Cash flows Cash + Accounts Receivable + Inventory = Accounts payable + Common Stock + Retained Earnings Revenue - Expenses = Net Income 1 \$40,000 + + = + \$40,000 + - = \$40,000 FA 2 + + \$32,000 = \$32,000 + + - = 3 (\$15,680) + + (\$320) = (\$16,000) + + - = (\$15,680) OA 4A + \$28,000 + = + + \$28,000 \$28,000 - = \$28,000 4B + + (\$16,000) = + + (\$16,000) - \$16,000 = (\$16,000) 5 \$27,720 + (\$28,000) + = + + (\$280) - \$280 = (\$280) \$27,720 OA 6 (\$2,100) + + = + + (\$2,100) - \$2,100 = (\$2,100) (\$2,100) OA 7 (\$16,000) + + = (\$16,000) + + - = (\$16,000) OA Total \$33,940 + \$0 + \$15,680 = \$0 + \$40,000 + \$9,620 \$28,000 - \$18,380 = \$9,620 \$33,940

Requirement B:

 Gross margin \$11,720 Net income \$9,620

Calculations:

 Sales revenue \$28,000 (less): Sales discount [\$28,000 x 1%] (\$280) Net sales \$27,720 (Less): Cost of goods sold (\$16,000) Gross margin \$11,720 (Less): Operating Expenses (\$2,100) Net income \$9,620

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