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Purchases and Sales of Merchandise, Cash Flows

Pedal City, a bike shop, opened for business on April 1. It uses a periodic inventory system. The following transactions occurred during the first month of business:

Required:

1. For each of the following transactions of Pedal City, prepare the appropriate journal entry.

April 1: Purchased five units from Giorgio, Inc. for $500 total, with terms 3/10, n/30, FOB destination. How does this entry affect the accounting equation? Indicate the effect on financial statement items by selecting "" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement.

April 10: Paid for the April 1 purchase. How does this entry affect the accounting equation? Indicate the effect on financial statement items by selecting "" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement.

April 15: Sold one unit for $200 cash. How does this entry affect the accounting equation? Indicate the effect on financial statement items by selecting "" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement.

April 18: Purchased ten units from Bush Enterprises for $900 total, with terms 3/10, n/30, FOB destination. How does this entry affect the accounting equation? Indicate the effect on financial statement items by selecting "" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement.

April 25: Sold three units for $200 each, cash. How does this entry affect the accounting equation? Indicate the effect on financial statement items by selecting "" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement.

April 28: Paid for the April 18 purchase. How does this entry affect the accounting equation? Indicate the effect on financial statement items by selecting "" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement.

Question

1. Determine net income for the month of April. Pedal City incurred and paid $100 for rent and $50 for miscellaneous expenses during April. Ending inventory is $967. (Ignore income taxes.) $

2. Assuming that these are the only transactions during April (including rent and miscellaneous expenses), compute net cash flow from operating activities. Use the minus sign to indicate cash out flows, a decrease in cash or cash payments. $

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