1. Academy Sales Company purchased $31,000 of inventory on account and paid $750 in freight costs for delivered goods. It returned $500 of inventory and received a cash discount. 2. ASC recognized $38,000 of cash revenue from merchandise sales with $30,000 of cost of goods sold. It paid $1,100 in freight costs for goods sold. 3. ASC paid $5,500 of selling and administrative expenses and sold land for $11,600 cash. It was asked to record the transactions, prepare financial statements, and calculate the expected net income for Year 3.

1. Academy Sales Company (ASC) started the Year 2 accounting period with the balances given in
the financial statements model shown as follows. During Year 2, ASC experienced the following
business events: 1. Purchased $31 , 000 of merchandise inventory on account, terms 2/10 , n /30 .
2. The goods that were purchased in Event 1 were delivered FOB shipping point. Freight costs of
$750 were paid in cash by the responsible party. 3. Returned $500 of goods purchased in Event 1
. 4. (a) Recorded the cash discount on the goods purchased in Event 1. (b) Pajd the balance due
on the account payable within the discount period. 5. (a) Recognized $38 , 000 of cash revenue
from the sale of merchandise. (b) Recognized $30 , 000 of cost of goods sold. 6. The
merchandise in Event 5 a was sold to customers FOB destination. Freight costs of $1 , 100 were
poid in cash by the responsible party. 7. Paid cash of $5 , 500 for selling and administrative
expenses. 8. Sold the land for $11 , 600 cash. Required a. Record these transactions in a financial
statements model. b. Prepare a schedule of cost of goods soid (Appendix). c. Prepare a mulistep
income statement include common size percentages on the income statement. d. ASC's gross
margin percentage in Yeor 1 was 20 percent. Based on the common size data in the income
statement, did ASC raise or lower its prices in Yoat 2 (Appendix)? e. Assuming a 10 percent rate
of growth, what is the amount of net income expected for Year 3 ? ACADEMY SALES
COMPANY Schedule of Cost of Goods Sold For the Period Ended December 31, Year 2
ACADEMY SALES COMPANY Income Statement Record these transactions in a financial
statements model. Prepare a schedule of cost of goods sold (Appendix). Prepare a multistep
income statement. Inclde common size percentages on the income statement. 1. ASC's gross
margin percentage in Year 1 was 20 percent. Based on the common size data in the income
statement, did ASC ower its prices in Year 2 (Appendix)? . Assuming a 10 percent rate of
growth, what is the amount of net income expected for Year 3 ? Complete this question by
entering your answers in the tabs below. d. ASC's gross margin percentage in Year 1 was 20
percent. Based on the common size data in the income staternent, did ASC ralse or lower its
prices in Year 2 (Appendix)? e. Assuming a 10 percent rate of growth, what is the amount of net
income expected for Year 3 ?