Answer:
a. Journals
Cash $30,000 (debit)
Common Stock $30,000 (credit)
<em>Cash in Exchange of Common Stock</em>
Inventory $18,000 (debit)
Cash $18,000 (credit)
<em>Cash Purchase of Inventory </em>
Cash $32,000(debit)
Cost of Sales $15,000 (debit)
Sales Revenue $32,000 (credit)
Inventory $15,000 (credit)
<em>Sale of Inventory on cash basis</em>
<em />
b. T - Accounts
<u>Cash Account</u>
Debit :
Common Stock $30,000
Sales Revenue $32,000
Credit :
Inventory $18,000
Balance $44,000
<u>Common Stock</u>
Debit :
Balance $30,000
Credit :
Cash $30,000
Balance
<u>Inventory</u>
Debit :
Cash $18,000
Credit :
Cost of Sales $15,000
Balance $3,000
<u>Sales</u>
Debit :
Balance $32,000
Credit :
Cash $32,000
<u>Cost of Sales </u>
<u>Debit :</u>
Inventory $15,000
Credit :
Balance $15,000
c. Gross Margin = $17,000
d. net cash flow from operating activities for Year 1 = $14,000
Explanation:
Gross Margin = Sales - Cost of Sales
= $32,000 - $15,000
= $17,000
<u>Net Cashflow from Operating Activities</u>
Cash Paid to Suppliers ($18,000)
<em>Calculation :</em>
Cost of Sales $15,000
Add Increase in Inventory $3,000
Cash Paid to Suppliers $18,000
Cash Receipts from Customers $32,000
Net Cash From Operating Activities $14,000
