Junker’s Stash started the Year 2 accounting period with the balances given in the following horizontal financial statem

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Junker’s Stash started the Year 2 accounting period with the
balances given in the following horizontal financial statements
model. During Year 2, Junker’s Stash experienced the following
business events:

1. Paid cash to purchase $72,000 of merchandise inventory.
2. The goods that were purchased in Event 1 were delivered FOB
destination. Transportation costs of $1,440 were paid in cash by
the responsible party.
3a. Sold merchandise for $75,000 under terms 1/10, n/30.
3b. Recognized $42,900 of cost of goods sold.
4a. Junker’s Stash customers returned merchandise that was sold for
$2,140.
4b. The merchandise returned in Event 4a had cost Junker’s Stash
$1,270.
5. The merchandise in Event 3a was sold to customers FOB
destination. Transportation costs of $1,670 were paid in cash by
the responsible party.
6a. The customers paid for the merchandise sold in Event 3a within
the discount period. Recognized the sales discount.
6b. Collected the balance in the accounts receivable account.
7. Paid cash of $6,900 for selling and administrative
expenses.
8. Sold the land for $9,200 cash.

Required
a. Record the above transactions in a
horizontal financial statements model.
b. Determine the number of net sales.
c. Prepare a multistep income statement.
Include common size percentages on the income statement.
d. The return-on-sales ratio for Junker’s
Stash during the prior year was 12 percent. Based on the common
size data in the income statement, did the expenses for Junker’s
Stash increase or decrease in Year 2? Assume sales are the same for
both years.