During 2014, King Merchandising Company purchased $26,000 of inventory on account. King sold inventory on account that cost $19,500 for $29,300. Cash payments on accounts payable were $16,300. There was $26,100 cash collected from accounts receivable. King also paid $4,600 cash for operating expenses. Assume that King started the accounting period with $21,000 in both cash and common stock.
Required
a. Record the above events in a horizontal statement model. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, NC for net change in cash and NA to indicate the element is not affected by the event. The beginning balances have been recorded as an example. (Enter any decreases to account balances and cash outflows with a minus sign.)
b. What is the balance of accounts receivable at the end of 2014?
c. What is the balance of accounts payable at the end of 2014?
d. What are the amounts of gross margin and net income for 2014?
e. Determine the amount of net cash flow from operating activities. (Enter cash outflows as negative amounts.)