Question

At the beginning of the current season on April 1, the ledger of Granite Hills Pro Shop showed Cash $3,075; Inventory $4,075; and Common Stock $7,150. The following transactions occurred during April 2017.

Apr. 5		Purchased golf bags, clubs, and balls on account from Arnie Co. $1,725, terms 4/10, n/60.
7		Paid freight on Arnie Co. purchases $92.
9		Received credit from Arnie Co. for merchandise returned $425.
10		Sold merchandise on account to members $1,541, terms n/30.
12		Purchased golf shoes, sweaters, and other accessories on account from Woods Sportswear $955, terms 1/10, n/30.
14		Paid Arnie Co. in full.
17		Received credit from Woods Sportswear for merchandise returned $155.
20		Made sales on account to members $932, terms n/30.
21		Paid Woods Sportswear in full.
27		Granted credit to members for clothing that did not fit properly $92.
30		Received payments on account from members $1,403.

1) Journalize the April transactions using a periodic inventory system. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. Round answers to 0 decimal places, e.g. 5,275.)

2) Using T accounts, enter the beginning balances in the ledger accounts and post the April transactions. (Post entries in the order of journal entries posted in part a. Round answers to 0 decimal places, e.g. 5,275. For accounts that have a zero balance select "4/30 Bal." from the list and enter 0 for the amount.)

3) Prepare a trial balance on April 30, 2017. (Do not list those accounts that have zero ending balance.)

4) Prepare an income statement through gross profit, assuming inventory on hand at April 30 is $4,902.

Answer 1

Journal Entries Under Periodic Inventory System:
Date	Account Title	Dr.	Cr.
5-Apr	Purchases	$ 1,725.00	$ 1,725.00
	Account Payable-Arnie
7	Freight in Exp.	$     92.00
	Cash		$     92.00
9	Account Payable	$   425.00
	Purchase Return		$   425.00
10	Account Receivable	$ 1,541.00
	Sales Revenue		$ 1,541.00
12	Purchase	$   955.00
	Account Payable-WS		$   955.00
14	Account Payable-Arnie	$ 1,300.00
	Allowance		$     52.00
	Cash		$ 1,248.00
17	Account Payable-WS	$   155.00
	Purchase Return		$   155.00
20	Account Receivable-	$   932.00
	Sales Revenue		$   932.00
21	Account Payable-WS	$   800.00
	Allowance		$       8.00
	Cash		$   792.00
27	Sales Return	$       92.00
	Account Receivable		$       92.00
30	Cash	$ 1,403.00
	Account Receivable		$ 1,403.00

Cash
Date	Account Title	Dr.	Cr.
1-Apr	Beg. Balance	$    3,075.0
7	Freight in		$          92.0
14	Account Payable		$    1,248.0
21	Account Payable		$        792.0
30	Account Receivable	$    1,403.0
30	Balance	$    2,346.0
Purchase
4-Apr	Account Payable	$    1,725.0
12	Account Payable	$        955.0
30	Balance	$    2,680.0
Account Payable
4-Apr	Purchase-Arnie		$    1,725.0
9	Purchase Return	$        425.0
12	Purchase-WS		$        955.0
14	Cash	$    1,248.0
14	Allowance	$          52.0
17	Purchase Return	$        155.0
21	Cash	$        792.0
21	Allowance	$            8.0
30	Balance	$ 0-	$ 0
Freight in Exp.
7-Apr	Cash	$          92.0
30	Balance	$          92.0
Purchase Return
9-Apr	Account Payable		$     425.00
17	Account Payable		$     155.00
30	Balance		$     580.00
Account Receivable
10-Apr	Sales Revenue	$ 1,541.00
20	Sales Revenue	$     932.00
27	Sales Return		$        92.00
30	Cash		$ 1,403.00
30	Balance	$    978.00
Sales Revenue
10-Apr	Account Receivable		$ 1,541.00
20	Account Receivable		$     932.00
30	Balance		$ 2,473.00
Allowances
14-Apr	Account Payable		$        52.00
21	Account Payable		$          8.00
30	Balance		$        60.00
Sales Return
27	Account Receivable	$        92.00
30	Balance	$        92.00
Common Stock
1-Apr	Balance		$ 7,150.00
30	Balance		$ 7,150.00

Trial Balance as on 30 April
Account Title	Dr.	Cr.
Cash	2,346
Purchase	2,680
AP		0
Freight in	92
Purchase Return		580
AR	978
Sales Revenue		2,473
Allowance		60
Sales Return	92
Common Stock		7150
Beginning Inventory inventory	4,075
Total	10,263	10,263

Income Statement
30-Apr
Net Sales- (2,473-92)		2,381
Less: Cost of goods sold:
Beginning Inventory	4,075
Purchase:	2,680
Less: Purchase Return &
Allowance (580+60)	-640
Add: Freight in	92
COGs Available for Sale	6,207
Less: Ending Inventory	-4,902	-1,305
Gross Profit		1,076