IThe following information applies to the questions displayed below.] The follow

Question

IThe following information applies to the questions displayed below.] The following information Morris Supply Company had the following transactions In 2010. 1. Acqulred $61,500 cash from the Issue of common stock. 2. Purchased $188,500 of merchandise for cash In 2010. 3. Sold merchandise that cost $108,900 for $198,000 during the year under the following terms. 53,000 Cash sales 138,000 Credit card sales (The credit card company charges a 3.80 percent service fee.) 7000 Sale Sales on account 4. Collected all the amount recelvable from the credit card company. 5. Collected $6,440 of accounts recelvable. 6. Pald selling and administrative expenses of $49,064. 7. Determined that 3.00 percent of the ending accounts recelvable would be uncollectible.

Explanation / Answer

Morris Supply Company All Amounts in $ Horizontal Statements Model Balance Sheet Income Statement Statement of Cash Flows Event Cash + Accounts - Allowance + Merchandise = Common + Equity Revenue - Expenses = Net Receivable Inventory Stock Retained Earnings 1 61500 = 61500 61500 FA NC 2 -188500 188500 -188500 OA NC 3a 53000 53000 53000 53000 OA NC 3b 138000 138000 138000 138000 OA NC 3c 7000 7000 7000 7000 OA NC 3c -108900 108900 -108900 OA NC 4 132756 138000 5244 -4416 4416 -4416 OA NC 5 6440 -6440 6440 OA NC 6 -49064 -49064 49064 -49064 OA NC 7 -210 210 -210 210 -210 OA NC Morris Supply Company Financial Statements For The Year Ended 2010 Income Statement Sales Revenue 198000 Cost of Goods Sold -108900 Gross Margin 89100 Operating Expenses Credit Card Expense 5244 Selling and Admin Expense 49064 Uncoll. Accounts Expense 210 Total Operating Expenses 54518 Net Income 34582 Statement of Changes in Shareholders' Equity Beginning Common Stock 0 Plus : Stock Issued 61500 Ending Common Stock 61500 Beginning Retained Earnings 0 Plus : Net Income 34582 Ending Retained Earnings 34582 Total Stockholders' Equity 96082 Morris Supply Company Balance Sheet As of the End of The Year 2010 Assets Cash 16132 Accounts Receivable 560 Less : Allowance for Doubtful Accounts -210 350 Merchandise Inventory 79600 Total Assets 96082 Liabilities Stockholders' Equity Common Stock 61500 Retained Earnings 34582 Total Liabilities and Stockholders' Equity 96082 Morris Supply Company Statement of Cash Flows For The Year Ended 2010 Cash Flow from Operating Activities Inflow from Customers 192196 Outflow for Inventory -188500 Outflow for Expenses -49064 Net Cash Flow from Operating Activities -45368 Cash Flows from Investing Activities 0 Cash Flows from Financing Activities Cash Flow from Stock Issued 61500 61500 Net Change in Cash 16132 Plus Beginning Cash Balance 0 Ending Cash Balance 16132

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