Question

Seved 2. 15 Doints During Year 1, Hardy Merchandising Company purchased $25,000 of inventory on account Hardy sold inventory on account that cost $18,800 for $28.100. Cash payments on accounts payable were $15,600. There was $25,000 cash collected from accounts receivable Hardy also paid $4,500 cash for operating expenses. Assume that Hardy started the accounting period with $20,500 in both cash and common stock Required a. Record the events in a horizontal statement model. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, or NC for net change in cash. If the element is not affected by the event, leave the cell blank b. What is the balance of accounts receivable at the end of Year 1? c. What is the balance of accounts payable at the end of Year 1? d. What are the amounts of gross margin and net income for Year 1? e. Determine the amount of net cash flow from operating activities Print o Complete this question by entering your answers in the tabs below. Red Reg tot Record the events in a horizontal statement model in the Cash Flow column, use to designate operating activity, IA for investment activity, FA for financing activity, or NC for net ch the chement is not affected by the event, leave the cell blank. (Not every cell will require entry. Enter any decreases to account balances and cash outflows with a minus sign.) HARDY MERCHANDISING COMPANY Effect of Events on the Financial Statements Balance Sheet Income Statement Event Assets - Liabilities - Stockholders' Equity Statement of Cash Net Cash Accounts Accounts Common Retained Revenue Flows Expenses - - Inventory Receivable Payable Stock Income Earnings Beg bal 20.500- - 20.500+ 1 + + + 3 + . + + 4 + 5 End bal ReBE >

Answer 1

Income Statement + Net Income Statement of Cash flow + + + Revenues Expenses Cash 20500 + + + - Hardy Merchandising Company Effect of Events on the Financial Statements Balancesheet Asset Liabilities Stockholder's Equity Accounts Accounts Common Retained Receivable + Inventory Payable Stock earnings 20500 + 25000 25000 + + 28100 + 28100 + -18800 -18800 + + -15600 + + -25000 + + + = -4500 + 3100 + 6200 = 9400 + 20500 + 4800 + + = + + + + Event Beg Bal. 1 2a 2b 3 4 5 End Bal. 28100 28100 -18800 + + + + 18800 + = = + + = -15600 + 25000 + -4500 + 25400 + -15600 OA 25000 OA -4500 OA + + = 4500 23300 -4500 4800 + 28100 =

b Accounts receivable = $3,100 с Accounts payable = $9400 d Gross margin = Sales - Cost of goods sold Gross margin = $28,100 - $18,800 Gross margin = $9,300 Net income = Gross margin - Operating expenses Net income = $9,300 - $4,500 Net income = $4,800 e Net cash flow from operating activities = -$15,600 + $25,000 - $4,500 Net cash flow from operating activities = $4,900

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