Problem 2. Scott Company is a merchandising business that was started in 2012. S

Question

Problem 2. Scott Company is a merchandising business that was started in 2012. Scott uses the perpetual inventory system. It experienced the following events during 2012.

1. Acquired $25,000 cash by issuing common stock
2. Purchased inventory on account that cost $14,000, terms 2/10, n/30
3. Sold inventory that had cost $8,400 for $15,000 cash
4. Paid for the merchandise referred to in event 2, within the discount period

Required:

1) Record the events in the financial statements model below; include column totals.
2) Prepare an income statement for 2012.

Explanation / Answer

Scott Company is a merchandising business that was started in 2012. Scott uses the perpetual inventory system. It experienced the following events during 2012. 1. Acquired $25,000 cash by issuing common stock Cash 25000 c-stock (25000) 2. Purchased inventory on account that cost $14,000, terms 2/10, n/30 inv 14000 a/p -14000 3. Sold inventory that had cost $8,400 for $15,000 cash Sales -15000 Cash 15000 inventory -8400 cgs 8400

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