Question

Splish Brothers Inc. completed the following merchandising transactions in the month of May. At the beginning of May, the ledger of Splish Brothers Inc. showed Cash of $5,500 and Common Stock of $5,500.

May 1		Purchased merchandise on account from Gray's Wholesale Supply $4,300, terms 2/10, n/30.
2		Sold merchandise on account $2,000, terms 1/10, n/30. The cost of the merchandise sold was $1,300.
5		Received credit from Gray's Wholesale Supply for merchandise returned $200.
9		Received collections in full, less discounts, from customers billed on sales of $2,000 on May 2.
10		Paid Gray's Wholesale Supply in full, less discount.
11		Purchased supplies for cash $300.
12		Purchased merchandise for cash $1,300.
15		Received refund for poor quality merchandise from supplier on cash purchase $150.
17		Purchased merchandise from Amland Distributors $1,200, FOB shipping point, terms 2/10, n/30.
19		Paid freight on May 17 purchase $100.
24		Sold merchandise for cash $3,000. The merchandise sold had a cost of $2,200.
25		Purchased merchandise on account from Horvath, Inc. $750, FOB destination, terms 2/10, n/30.
27		Paid Amland Distributors in full, less discount.
29		Made refunds to cash customers for defective merchandise $70. The returned merchandise had a fair value of $30.
31		Sold merchandise on account $1,000, terms n/30. The cost of the merchandise sold was $500.

Splish Brothers Inc. ’s chart of accounts includes the following: No. 101 Cash, No. 112 Accounts Receivable, No. 120 Inventory, No. 126 Supplies, No. 201 Accounts Payable, No. 311 Common Stock, No. 401 Sales Revenue, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, and No. 505 Cost of Goods Sold.

A) Journalize the transactions using a perpetual inventory system. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter "0" for the amounts. Record journal entries in the order presented in the problem.)

B) Enter the beginning cash and common stock balances and post the transactions. (Post entries in the order of journal entries presented in the previous question.)

C) Prepare an income statement through gross profit for the month of May 2019.

Answer 1

	Splish Brother Inc.
	Journal Entries
Date	Particular	Debit	Credit
01-May	Mercendise Inventory	$    4,300.00
	Accounts Payable		$    4,300.00
	(Being amount of Merchandise purchased from Gray Wholesale Supply)
02-May	Accounts Receivale	$    2,000.00
	Sales		$    2,000.00
	(Sold Merchandise on account )
03-May	Cost of goods sold	$    1,300.00
	Mercendise Inventory		$    1,300.00
	(Being amount of cost of Merchandise sold)
05-May	Accounts Payable	$        200.00
	Mercendise Inventory		$        200.00
	(Being amount of credt of Whole sale Supply for goods returned)
09-May	Cash	$    1,960.00
	Sales Discount($2000*2%)	$          40.00
	Accounts Receivable		$    2,000.00
	(Being amount received from sales on 2nd May)
10-May	Accounts Payable($4300-$200)	$    4,100.00
	Purchase Discount		$          82.00
	Cash		$    4,018.00
	(Being amount paid to Suppler)
11-May	Supplies	$        300.00
	Cash		$        300.00
	(Being amount of Supplies Purchased)
12-May	Mercendise Inventory	$    1,300.00
	Cash		$    1,300.00
	(Being amount of Purchased of Merchandise )
15-May	Cash	$        150.00
	Mercendise Inventory		$        150.00
	(Being amount received from supplier due to poor quality merchandise)
17-May	Mercendise Inventory	$    1,200.00
	Accounts Payable		$    1,200.00
	(Being amount of merchandise purchased from Aminand Distributor)
19-May	Mercendise Inventory	$        100.00
	Cash		$        100.00
	(Being amount of freight paid on merchandise purchased on 17th May)
24-May	Cash	$    3,000.00
	Sales		$    3,000.00
	(Being amount of Cash Sales)
	Cost of goods sold	$    2,200.00
	Mercendise Inventory		$    2,200.00
	(Being amount of cost of Merchandise sold)
25-May	Mercendise Inventory	$        750.00
	Accounts Payable		$        750.00
	(Being of Merchandise purchased on account)
27-May	Accounts Payable	$    1,200.00
	Mercendise Inventory($1200*2%)		$          24.00
	Cash		$    1,176.00
	(Being amount paid to Amland Distributor)
29-May	Sales Return & Allownaces	$          70.00
	Cash		$          70.00
	(Being amount of Sales Return)
	Mercendise Inventory	$          30.00
	Cost of goods sold		$          30.00
	(Being amount of cost of Merchandise sold)
31-May	Accounts Receivable	$    1,000.00
	Sales		$    1,000.00
	(Being amount of sals of merchandise on account)
	Cost of goods sold	$        500.00
	To Mercendise Inventory		$        500.00
	(Being amount of cost of Merchandise sold)
	Cash Account
Date	Particular	Amount	Date	Partcular	Amount
01-May	To Opening Balance	$    5,500.00	10-May	Accounts Payable	$    4,018.00
09-May	ToAccounts Recevable	$    1,960.00	11-May	Supplies	$        300.00
15-May	Mercendise Inventory	$        150.00	12-May	Mercendise Inventory	$    1,300.00
24-May	Sales	$    3,000.00	19-May	Mercendise Inventory	$        100.00
			27-May	Accounts Payable	$    1,176.00
			29-May	Sales return & Allowances	$          70.00
				Balance C/d	$    3,646.00
		$ 10,610.00			$ 10,610.00
	Sales A/c
Date	Particular	Amount	Date	Partcular	Amount
31-May	Balance C/d	$    6,000.00	02-May	Accounts Receivable	$    2,000.00
			24-May	Cash	$    3,000.00
			31-May	Accounts Receivable	$    1,000.00
	Total	$    6,000.00	19-May	Total	$    6,000.00
	Cost of Goods Sold
Date	Particular	Amount	Date	Partcular	Amount
03-May	Mercendise Inventory	$    1,300.00	31-May	Balance c/d	$    4,000.00
24-May	Mercendise Inventory	$    2,200.00
31-May	Mercendise Inventory	$        500.00
	Total	$    4,000.00		Total	$    4,000.00
	Splish Brothers Inc
	Income Statement
	Sales	$    6,000.00
	Less: Sales return & Allowances	$          70.00
	Sales Discount	$          40.00
	Net Sales	$    5,890.00
	Cost of goods sold	$    4,000.00
	Gross Profit	$    1,890.00