Clayton Computers was started in 2014. The company experienced the following acc

Question

Clayton Computers was started in 2014. The company experienced the following accounting events during its first year of operation 1. Started business when it acquired $85,000 cash from the issue of common stock. 2. Purchased merchandise with a list price of $69,000 on account, terms 3/10, n/30 3. Paid off one-half of the accounts payable balance within the discount period 4. Sold merchandise on account that had a list price of $56,100. Credit terms were 2/20, n/30. The merchandise had cost Clayton Computers $33,700 5. Collected cash from the account receivable within the discount period 6. Paid $10,100 cash for operating expenses 7. Paid the balance due on accounts payable. The payment was not made within the discount period Required a. Record the events in a horizontal statements model below. In the Cash Flows column, use the letters OA to designate operating activity, IA for investing activity, FA for financing activity, NC for net change in cash and NA to indicate accounts not affected by the event. The first event is recorded as an example (Enter any decreases to account balances and cash outflows with a minus sign.) CLAYTON COMPUTERS Horizontal Statements Model for 2014 Assets = Liabilities + Stockholders' Equity Income Statement Receivable + Inventory = Accounts Payable Statement of Cash Flows Event Cash Accounts Common+ Stock evenue ExpensesNet Earnings Income 85,000 FA (69,000) 85,000+ 85,000+ 69,000+ (34,500)|+ +(69,000) (69,000)|= (69,00of - (34,155) 345) 4b 5 6 50,845+ 345) + 0|=| 34.500 | +| 85,000 | +| (69,000) 01-1 (69,000)- (69,000) 16,000

Explanation / Answer

Account inventory Accounts Common Retained Revenue expense Net cash cash receivable payable stock earnings income flow 1 85,000 85,000 85,000FA 2 69,000 69,000 3 -33,465 -1,035 -34,500 -33465 OA 4a 56,100 56,100 56,100 56,100 NA 4b -33,700 -33,700 -33,700 -33,700 NA 5 54978 -56,100 -1122 -1,122 -1,122 54978OA 6 -10,100 -10,100 -10,100 -10,100 -10100OA 7 -34,500 -34,500 -34500OA total 61,913 0 34265 0 85,000 11178 56100 -44922 11,178 gross profit margin = gross profit/sales gross profit = net sales - cost of goods sold 54,978 - 33700 21278 Gross profit = 21278/54978 38.70% net income for the period 11,178

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