Wilson Lawn & Garden sells lawn and garden equipment and products, including 50-pound bags of fertilizer. Using the following information to show how Wilson's June purchases and sales of 50-pound fertilizer bags impacted its statement of cash flows, income statement, and balance sheet during the month. For the balance sheet, indicate changes to the balance sheet. These amounts will not necessarily equal the June 30 ending balances in the balance sheet accounts. List account names or transaction descriptions in the first column and amounts in the second column. The company uses a perpetual inventory system.
-June Cost of Goods Sold is $ 11,750.
-Ending inventory on June 30 is $ 7,350.
-Wilson purchased $16,100 of inventory on account during the month of June.
-There was a $4,200 beginning balance in the Accounts Payable account on June 1.
-Suppliers were paid $13,500 during the month of June.
-Wilson earned $15,700 of revenue on sales of the fertilizer bags. $5,500 of the revenue related to cash sales and the rest were credit sales.
-There was no beginning balance in the Accounts Receivable account.
Balance Sheet :
The balance sheet is prepared by the end of the financial year this will show the position of the organization, balance sheet is used by the insiders as well as the outsiders.
Answer and Explanation:
|Particulars||Accounts Debited||Account Credited||Impact on Cash Flow||Impact on Income Statement||Impact on Balance Sheet|
|-June Cost of Goods Sold is $ 11,750.||Cost of goods sold||Inventory||No Flow of Cash||Cost of goods sold increses the expenses in the income statement||The assets under the balance sheet would be reduces by $ 11750|
|-Ending inventory on June 30 is $ 7,350.||Inventory||Income Statement||No Flow of Cash||The inventory in hand increses the income in income statement||The recording of closing inventory would increses the assets by $ 7350|
|-Wilson purchased $16,100 of inventory on account during the month of June.||Inventory||Accounts Payable||No Flow of Cash||No effect to income statement||increase in assets as well as liabilities for accounts payable|
|-There was a $4,200 beginning balance in the Accounts Payable account on June 1.||None||None||No Flow of Cash||No effect to income statement||No change|
|-Suppliers were paid $13,500 during the month of June.||Accounts Payable||Cash||Cash outflow||No effect to income statement||The liabilities will be reduced and assets will also be reduced|
|-Wilson earned $15,700 of revenue on sales of the fertilizer bags. $5,500 of the revenue related to cash sales and the rest were credit sales.||Accounts Receivable||Sales Revenue||Inflow of cash $ 5500||The increse in sales revenue increses the income||The sale of goods for cash increses the assets and reduced the inventory|
|-There was no beginning balance in the Accounts Receivable account.||None||None||No Flow of Cash||No effect to income statement||No change|
Learn more about this topic:
from Accounting 201: Intermediate Accounting IChapter 4 / Lesson 9