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Problem 3-25 Comprehensive cycle problem: Perpetual system At the beginning of 2012, the Jeater Company had the following balances in its accounts: Cash $4,300 Inventory 9,000 Common Stock 10,000 Retained Earnings 3,300 During 2012, the company experienced the following events. a. Identify these events as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). 1. Purchased inventory that cost $2,200 on account from Blue Company under terms 1/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $110 were paid in cash. (Asset Source Transaction,) 2. Returned $200 of the inventory that it had purchased because the inventory was damaged in transit. The freight company agreed to pay the return freight cost. (Asset Use Transaction) 3. Paid the amount due on its account payable to Blue Company within the cash discount period. (Asset Use Transaction.) 4. Sold inventory that had cost $3,000 for $5,500 on account, under terms 2/10, n/45. (Asset Exchange Transaction) 5. Received merchandise returned from a customer. The merchandise originally cost $400 and was sold to the customer for $710 cash during the previous accounting period. The customer was paid $710 cash for the returned merchandise. (Asset Exchange Transaction) 6. Delivered goods FOB destination in Event 4. Freight costs of $60 were paid in cash. (Asset Use Transaction) 7. Collected the amount due on the account receivable within the discount period.( Asset Exchange Transaction.) 8. Took a physical count indicating that $7,970 of inventory was on hand at the end of the accounting period. (Asset Use Transaction) b. Record each event in a statements model like the following one. c. Prepare an income statement, a statement of changes in stockholdersâ€™ equity a balance sheet, and a statement of cash flows.
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