Question

At the beginning of the current season on April 1, the ledger of Ivanhoe Pro Shop showed Cash $3,000; Inventory $3,500; and Common Stock $6,500. The following transactions were completed during April 2022.

Apr. 5		Purchased golf bags, clubs, and balls on account from Arnie Co. $2,200, terms 3/10, n/60.
7		Paid freight on Arnie purchase $80.
9		Received credit from Arnie Co. for merchandise returned $600.
10		Sold merchandise on account to members $1,480, terms n/30. The merchandise sold had a cost of $880.
12		Purchased golf shoes, sweaters, and other accessories on account from Woods Sportswear $980, terms 2/10, n/30.
14		Paid Arnie Co. in full.
17		Received credit from Woods Sportswear for merchandise returned $80.
20		Made sales on account to members $830, terms n/30. The cost of the merchandise sold was $550.
21		Paid Woods Sportswear in full.
27		Granted an allowance to members for clothing that did not fit properly $75.
30		Received payments on account from members $1,150.

A. Journalize the April transactions using a perpetual 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.)

Date	Account Titles and Explanation	Debit	Credit

B. 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. For accounts that have a zero balance select "4/30 Bal." from the list and enter 0 for the amount.)

C. Prepare a trial balance on April 30, 2022. (Do not list those accounts that have zero ending balance.)

D. Prepare an income statement through gross profit for the month of April 2022.

Answer 1

Please find below the required answer for above given question:

A.

In the books of Ivanhoe Pro Shop
Journal Entries for the month ended April 30, 2022
Date	Account Titles and Explanation	Debit	Credit
Apr. 5	Inventory	$2,200
	Accounts Payable		$2,200
	[Being merchandise such as golf bags, clubs and balls purchased on account from Arnie Co. with terms 3/10, n/60]
Apr. 7	Freight Inward	$80
	Cash		$80
	[Being freight paid in cash on above purchases from Arnie Co.]
Apr. 9	Accounts Payable	$600
	Inventory		$600
	[Being credit received from Arnie Co. for merchandise returned]
Apr. 10	Accounts Receivable	$1,480
	Cost of Goods Sold	$880
	Sales		$1,480
	Inventory		$880
	[Being merchandise costing $880 sold on account to members with terms n/30]
Apr. 12	Inventory	$980
	Accounts Payable		$980
	[Being merchandise such as golf shoes, sweaters and other accessories purchased on account from Woods Sportswear with terms 2/10, n/30]
Apr. 14	Accounts Payable	$1,600
	Cash		$1,552
	Purchase/Cash Discount		$48
	[Being paid Arnie Co. in full after deducting purchase return of $600 and 3% cash discount on $1,600 as per agreed terms 3/10, n/60]
Apr. 17	Accounts Payable	$80
	Inventory		$80
	[Being credit received from Woods Sportswear for merchandise returned]
Apr. 20	Accounts Receivable	$830
	Cost of Goods Sold	$550
	Sales		$830
	Inventory		$550
	[Being merchandise costing $550 sold on account to members with terms n/30]
Apr. 21	Accounts Payable	$900
	Cash		$882
	Purchase/Cash Discount		$18
	[Being paid Wood Sportswear in full after deducting purchase return of $80 and 2% cash discount on $900 as per agreed terms 2/10, n/30]
Apr. 27	Sales Return and Allowances	$75
	Accounts Receivable		$75
	[Being granted an allowance to members for clothing that didn't fit properly]
Apr. 30	Cash	$2,235
	Accounts Receivable		$2,235
	[Being payments received on account from members after deducting an above granted allowance of $75]

B.

Ledger Entries (T-Accounts) for the month ended April 30, 2022
Inventory
Apr. 1	Opening Balance c/d	$3,500	Apr. 9	Accounts Payable	$600
Apr. 5	Accounts Payable	$2,200	Apr. 10	Cost of Goods Sold	$880
Apr. 12	Accounts Payable	$980	Apr. 17	Accounts Payable	$80
			Apr. 20	Cost of Goods Sold	$550
			Apr. 30	Closing Balance c/f	$4,570
		$6,680			$6,680
Accounts Payable
Apr. 9	Inventory	$600	Apr. 5	Inventory	$2,200
Apr. 14	Cash	$1,552	Apr. 12	Inventory	$980
Apr. 14	Purchase/Cash Discount	$48
Apr. 17	Inventory	$80
Apr. 21	Cash	$882
Apr. 21	Purchase/Cash Discount	$18
		$3,180			$3,180
Freight Inward
Apr. 7	Cash	$80	Apr. 30	Closing Balance c/f	$80
		$80			$80
Cash
Apr. 1	Opening Balance c/d	$3,000	Apr. 7	Freight Inward	$80
Apr. 30	Accounts Receivable	$2,235	Apr. 14	Accounts Payable	$1,552
			Apr. 21	Accounts Payable	$882
			Apr. 30	Closing Balance c/f	$2,721
		$5,235			$5,235
Accounts Receivable
Apr. 10	Sales	$1,480	Apr. 27	Sales Return and Allowances	$75
Apr. 20	Sales	$830	Apr. 30	Cash	$2,235
		$2,310			$2,310
Cost of Goods Sold
Apr. 10	Inventory	$880	Apr. 30	Closing Balance c/f	$1,430
Apr. 20	Inventory	$550
		$1,430			$1,430
Sales
Apr. 30	Closing Balance c/f	$2,310	Apr. 10	Accounts Receivable	$1,480
			Apr. 20	Accounts Receivable	$830
		$2,310			$2,310
Purchase/Cash Discount
Apr. 30	Closing Balance c/f	$66	Apr. 14	Accounts Payable	$48
			Apr. 21	Accounts Payable	$18
		$66			$66
Sales Return and Allowances
Apr. 27	Accounts Receivable	$75	Apr. 30	Closing Balance c/f	$75
		$75			$75

C.

Trial Balance as on April 30, 2022
Particulars	Debit	Credit
Inventory	$4,570
Accounts Payable		$0
Freight Inward	$80
Cash	$2,721
Accounts Receivable	$0
Cost of Goods Sold	$1,430
Sales		$2,310
Purchase/Cash Discount		$66
Sales Return and Allowances	$75
Common Stock		$6,500
Total	$8,876	$8,876

D.

Income Statement for the month ended April 30, 2022
Sales		$2,310
Less:
Cost of Goods Sold	$1,430
Freight Inward	$80
Sales Return and Allowances	$75	$1,585
		$725
Add: Purchase/Cash Discount		$66
Gross Profit c/f		$791