January

• Concordia Company sold common stock at par for $100,000.
• Inventory was purchased for $75,000 cash.
• There are no operating expenses

Required:
For the first month (January) of this new company, prepare:

1. an income statement with a detailed cost of goods section that reflects inventory balances and purchases.
2. a balance sheet
3. a statement of cash flows (indirect).

Solution

February A

• Sold all of the inventory for $85,000 cash.
• There are no operating expenses

Required:
For February, prepare:

1. an income statement with a detailed cost of goods section that reflects inventory balances and purchases.
2. a balance sheet
3. a statement of cash flows (indirect)..
   

Solution

February B

• Sold all of the inventory for $85,000 on account (A/R).
• There are no operating expenses

Required:
  Redo February, prepare:

1. an income statement with a detailed cost of goods section that reflects inventory balances and purchases.
2. a balance sheet
3. a statement of cash flows (indirect)..
   

Solution

February C

• Sold all of the inventory for $85,000 with 60% of the sale on credit(A/R) and 40% cash.
  
• There are no operating expenses

Required:
  Redo February, prepare:

1. an income statement with a detailed cost of goods section that reflects inventory balances and purchases.
2. a balance sheet
3. a statement of cash flows (indirect)..
   

Solution

March

• Continue from February C (i.e., the example with 60% of the sales on credit).
• In March there were no sales and no purchases of inventory.
  
• A truck was purchased on March 1 for $40,000 cash.
  
• The only operating expense was depreciation expense, $3,000.

Required:
  For March, prepare:

1. an income statement with a detailed cost of goods section that reflects inventory balances and purchases.
2. a balance sheet
3. a statement of cash flows (indirect)..
   

Solution