prepare an income statement statement of changes in stockholders equity balance shee 650293

Accounting for credit card sales and uncollectible accounts: percent of receivables allowance method

Morris Supply Company had the following transactions in 2010.

1. Acquired $50,000 cash from the issue of common stock.

2. Purchased $210,000 of merchandise for cash in 2010.

3. Sold merchandise that cost $140,000 for $265,000 during the year under the following terms.

4. Collected all the amount receivable from the credit card company.

5. Collected $23,000 of accounts receivable.

6. Paid selling and administrative expenses of $76,000.

7. Determined that 5 percent of the ending accounts receivable balance would be uncollectible.

Required

a. Record the above events in a horizontal statements model like the following one. When you record amounts in the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA). The letters NA indicate that an element is not affected by the event.

b. Prepare an income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for 2010.