Merrick Company Began Operations in 2014 by Issuing Common Stock

question 112

Essay

Merrick Company began operations in 2014 by issuing common stock for $400 cash. During the year, Merrick Company purchased $800 of merchandise on account. It sold for $920 cash inventory that had cost $650. It paid off $500 on its account payable and also paid $180 cash for operating expenses.
Required:
a) Record the events in the statements model, below. Show amounts of increases and decreases. Indicate whether each cash flow is an operating activity, investing activity, or financing activity.
b) Prepare the 2014 income statement for Merrick using a multistep format.

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Definitions:

Cognitive Therapy

A form of psychotherapy that focuses on changing unhelpful or unhealthy ways of thinking, thus influencing behavior and emotional state.

Self-critical Patterns

Persistent negative thoughts and evaluations about oneself that can affect mental health and wellbeing.

Behavior

The actions or reactions of an object or organism, usually in relation to the environment or stimuli.

Psychoanalytic

Relating to the psychological theory and therapy developed by Sigmund Freud that focuses on unconscious processes influencing behavior.