Comprehensive Example


The following events pertain to the Uncle Joe, Inc. for March 2015, its first month of operation. The company uses the perpetual inventory system.

1) Beginning cash balance and retained earnings balance was $10,000

2) March 2: Purchased $8,500 of merchandise on account with terms 2/10, n/30, FOB shipping point.

3) March 2: Paid $500 cash for shipping charges on the previous purchase.

4) March 3: Returned $800 of the merchandise purchased on March 3.

5) March 4: Sold merchandise that cost $3,000 for $5,500 cash.

6) March 8: Recorded the discount and paid the amount due from the purchase of merchandise on March 1

Prepare the journal entry, t-accounts, income statement, statement of changes in equity and balance sheet statement.