Financial accounting 16th Edition by Jan Williams,Susan Haka,Mark Bettner ,Joseph Carcello

Exercise 51

Effects of Basic Merchandising Transactions
Shown below are selected transactions of K on shock's, a retail store that uses a perpetual inventory system.
a.urchased merchandise on account.
b.ecognized the revenue from a sale of merchandise on account.Ignore the related cost of goods sold.)
c.ecognized the cost of goods sold relating to the sale in transaction b.
d.ollected in cash the account receivable from the customer in transaction
e.ollowing the taking ofa physical inventory at year-end, made an adjusting entry to record a normal amount of inventory shrinkage.
Indicate the effects of each of these transactions on the elements of the company's financial statements shown below.rganize your answer in tabular form, using the column headings shown.elow.Notice that the cost of goods sold is shown separately from all other expenses.) Use the code letters I for increase,Dfordecrease, and NE for no effect.