Mattress Warehouse,which uses the perpetual inventory system,experienced the following events during December 2016:
1.Issued common stock for cash.
2.Borrowed money from the Star City Bank issuing a note payable.
3.Purchased inventory on account,terms 2/10,n/30,FOB shipping point.
4.Returned part of the merchandise purchased in event #3.
5.Paid shipping costs on merchandise purchased in event #3.
6.Sold merchandise for cash.Label the revenue recognition 6(a)and the expense recognition 6(b).
7.Paid shipping costs to deliver goods sold in event #6.
8.Recorded the discount allowed in event #3.
9.Recorded the payment for goods purchased in event #3.
10.Accrued interest on the note payable issued in event #2 (note is not due for several months).
Required: Identify each event as asset source (AS),asset use (AU),asset exchange (AE),or claims exchange (CE).Also explain how each event affects the financial statements by placing a + for increase,- for decrease,NA for not affected under each of the components of the following statements model.If an element both increases and decreases,mark with "+-".Also,indicate in the cash flow column if the event would be recorded as an operating activity (OA),an investing activity (IA)or a financing activity (FA).The first event is recorded as an example.

Question

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The Answer of Mattress Warehouse,which uses the perpetual inventory system,experienced the following events during December 2016:
1.Issued common stock for cash.
2.Borrowed money from the Star City Bank issuing a note payable.
3.Purchased inventory on account,terms 2/10,n/30,FOB shipping point.
4.Returned part of the merchandise purchased in event #3.
5.Paid shipping costs on merchandise purchased in event #3.
6.Sold merchandise for cash.Label the revenue recognition 6(a)and the expense recognition 6(b).
7.Paid shipping costs to deliver goods sold in event #6.
8.Recorded the discount allowed in event #3.
9.Recorded the payment for goods purchased in event #3.
10.Accrued interest on the note payable issued in event #2 (note is not due for several months).
Required: Identify each event as asset source (AS),asset use (AU),asset exchange (AE),or claims exchange (CE).Also explain how each event affects the financial statements by placing a + for increase,- for decrease,NA for not affected under each of the components of the following statements model.If an element both increases and decreases,mark with "+-".Also,indicate in the cash flow column if the event would be recorded as an operating activity (OA),an investing activity (IA)or a financing activity (FA).The first event is recorded as an example.

Mattress Warehouse,which Uses the Perpetual Inventory System,experienced the Following Events