Problem 3-1

Lisa’s Dress Shop (LDS) experienced the following events in2017.  Indicate how each of the events affects thecompany’s financial statements, using the financial statement modelprovided.  LDS’ beginning balances for 2017 are Cash$100,000,  Common Stock $75,000 and Retained Earnings$25,000.

1. LDS purchased merchandise with a list price of $65,000 onaccount, terms 2/10, n/30.

2. The goods were purchased FOB shipping point with freight costpaid of $1,500 in cash.

3. (a) Sold merchandise for $80,000 to a customer onaccount.  (b) The merchandise sold had a net cost to LDSof $48,900.

4. LDS paid in cash freight cost of $1,100 for goods deliveredto customers FOB destination.

5. Paid the balance due on accounts payable of $63,700 withinthe discount period.

6. Collected $55,000 cash from accounts receivablecustomers.

7. Paid $19,600 in cash for other operating expenses.

            

	Assets					=	Liabilities	+	Stockholder’s Equity
	Cash	+	Accounts Receivable	+	Inventory	=	Accounts Payable	+	Common Stock	Retained Earnings	Account Title for Retained Earnings
Beginning Balances, 1/1/17	100,000								75,000	25,000
1.
2.
3(a)
3(b)
4.
5.
6.
7.
Ending Balances, 12/31/17

After recording the above transactions, prepare anincome statement and balance sheet for calendar year2017.