Question

Required information [The following information applies to the questions displayed below.) Powell Company began the Year 2 accounting period with $19,000 cash, $60,200 inventory, $48,400 common stock, and $30,800 retained earnings. During Year 2, Powell experienced the following events: 1. Sold merchandise that cost $38,200 for $75,200 on account to Prentise Furniture Store. 2. Delivered the goods to Prentise under terms FOB destination. Freight costs were $390 cash. 3. Received returned goods from Prentise. The goods cost Powell $1,820 and were sold to Prentise for $3,990, 4. Granted Prentise a $1,090 allowance for damaged goods that Prentise agreed to keep 5. Collected partial payment of $52,300 cash from accounts receivable. c. Prepare an income statement, balance sheet, and statement of cash flows. (Statement of Cash Flows only, items to be deducted must be indicated with a negative amount.) POWELL COMPANY Income Statement For the Year Ended December 31, Year 2 Net sales Cost of goods sold Gross margin Operating expenses Transportation-out Net income $ 0 0

Answer 1

Requirement [c Powell Company Income Statement For the Year ended December 31, Year 2 Net Sales $ 70,120 Cost of goods sold $36,380 Gross Margin $33,740 Operating Expenses Transportation Out $ 390 Net Income $33,350 Powell Company Balance Sheet As of December 31 Year 2 Assets Cash $ 70,910 Accounts Receivable $ 17,820 Merchandise Inventory $23,820 $ 112,550 Total Assets Liabilities Stockholder's Equity Common Stock Retained Earnings $ 48,400 $64,150 Total Stockholder's Equity Total Liabilities and Stockholder's Equity $ 112,550 $ 112,550 Powell Company Statement of Cash Flows For the Year Ended December 31, Year 2 Cash flow from operating activities; Cash inflow from customers $ 52,300 Cash outflow for expenses $ (390) Net Cash flow from operating activities Cash flow from Investing activities Cash flow from Financing activities Net Change in Cash Plus : Beginning Cash Balance Ending Cash Balance $ 51,910 $ $ $ 51,910 $ 19,000 $ 70,910 Note : Please comment down for any further clarifications