Required information Exercise 3-7A (Static) Effect of purchase returns and allowances and freight costs on the financial statements: Perpetual system LO 3-2, 3-3, 3-4 [The following information applies to the questions displayed below.] The beginning account balances for Terry's Auto Shop as of January 1, Year 2, follow: The following events affected the company during the Year 2 accounting period: 1. Purchased merchandise on account that cost $15 , 000 . 2. The goods in Event 1 were purchased FOB shipping point with freight cost of $800 cash. 3. Returned $2 , 600 of damaged merchandise for credit on account. 4. Agreed to keep other damaged merchandise for which the company received a $1 , 100 allowance. 5. Sold merchandise that cost $15 , 000 for $31 , 000 cash. 6. Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $500 cash. 7. Paid $8 , 000 on the merchandise purchased in Event 1 . Complete this question by entering your answers in the tabs below. Prepare an income statement. Complete this question by entering your answers in the tabs below. Prepare a statement of cash flows. (Amounts to be deducted should be indicated with a minus sign.)
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Required information Exercise 3-7A (Static) Effect of purchase returns (1).docx
1. Required information Exercise 3-7A (Static) Effect of purchase returns and allowances and
freight costs on the financial statements: Perpetual system LO 3-2, 3-3, 3-4 [The following
information applies to the questions displayed below.] The beginning account balances for
Terry's Auto Shop as of January 1, Year 2, follow: The following events affected the company
during the Year 2 accounting period: 1. Purchased merchandise on account that cost $15 , 000 .
2. The goods in Event 1 were purchased FOB shipping point with freight cost of $800 cash. 3.
Returned $2 , 600 of damaged merchandise for credit on account. 4. Agreed to keep other
damaged merchandise for which the company received a $1 , 100 allowance. 5. Sold
merchandise that cost $15 , 000 for $31 , 000 cash. 6. Delivered merchandise to customers in
Event 5 under terms FOB destination with freight costs amounting to $500 cash. 7. Paid $8 , 000
on the merchandise purchased in Event 1 . Complete this question by entering your answers in
the tabs below. Prepare an income statement. Complete this question by entering your answers in
the tabs below. Prepare a statement of cash flows. (Amounts to be deducted should be indicated
with a minus sign.)
![Required information Exercise 3-7A (Static) Effect of purchase returns and allowances and
freight costs on the financial statements: Perpetual system LO 3-2, 3-3, 3-4 [The following
information applies to the questions displayed below.] The beginning account balances for
Terry's Auto Shop as of January 1, Year 2, follow: The following events affected the company
during the Year 2 accounting period: 1. Purchased merchandise on account that cost $15 , 000 .
2. The goods in Event 1 were purchased FOB shipping point with freight cost of $800 cash. 3.
Returned $2 , 600 of damaged merchandise for credit on account. 4. Agreed to keep other
damaged merchandise for which the company received a $1 , 100 allowance. 5. Sold
merchandise that cost $15 , 000 for $31 , 000 cash. 6. Delivered merchandise to customers in
Event 5 under terms FOB destination with freight costs amounting to $500 cash. 7. Paid $8 , 000
on the merchandise purchased in Event 1 . Complete this question by entering your answers in
the tabs below. Prepare an income statement. Complete this question by entering your answers in
the tabs below. Prepare a statement of cash flows. (Amounts to be deducted should be indicated
with a minus sign.)](https://image.slidesharecdn.com/requiredinformationexercise3-7astaticeffectofpurchasereturns1-230222153617-931b8aa4/85/Required-information-Exercise-3-7A-Static-Effect-of-purchase-returns-1-docx-1-320.jpg)
