PLEASE HELP ME UNDERSTAND THE ONES I MISSED Exercise 316 Eff

PLEASE HELP ME UNDERSTAND THE ONES I MISSED

Exercise 3-16 Effect of sales returns and allowances and freight costs on the financial statements: Perpetual system LO 3-4 The following information applies to the questions displayed below. Poole Company began the 2014 accounting period with $18,500 cash, $60,300 inventory, $48,200 common stock, and $30,600 retained earnings. During the 2014 accounting period, Poole experienced the following events: 1. Sold merchandise costing $36,900 for $75,300 on account to Mable\'s General Store. 2. Delivered the goods to Mable\'s under terms FOB destination. Freight costs were $360 cash. 3. Received returned goods from Mable\'s. The goods cost Poole Company $1,940 and were sold to Mable\'s for $3,860 4. Granted Mable\'s a $1,110 allowance for damaged goods that Mable\'s agreed to keep. 5. Collected partial payment of $52,200 cash from accounts receivable

Solution

Revenue or expenses affect Retained earnings. Reveneu increase retained earnings and expenses decrease retained earnings. Retained Earnings Statement of cash flows 30600 NA -36900 0 NA 75300 0 NA -360 -360 OA -3860 0 NA 1940 0 NA -1110 0 NA 0 52200 OA 65610 51840 NC