Question

Winters Hardware Store completed the following merchandising transactions in the month of May. At the beginning of May, Winters’ ledger showed Cash of $11,200 and Common Stock of $11,200.

May 1		Purchased merchandise on account from Black Wholesale Supply for $7,900, terms 1/10, n/30.
2		Sold merchandise on account for $4,800, terms 2/10, n/30. The cost of the merchandise sold was $3,600.
5		Received credit from Black Wholesale Supply for merchandise returned $300.
9		Received collections in full, less discounts, from customers billed on May 2.
10		Paid Black Wholesale Supply in full, less discount.
11		Purchased supplies for cash $1,260.
12		Purchased merchandise for cash $4,340.
15		Received $322 refund for return of poor-quality merchandise from supplier on cash purchase.
17		Purchased merchandise from Wilhelm Distributors for $2,750, terms 2/10, n/30.
19		Paid freight on May 17 purchase $350.
24		Sold merchandise for cash $7,700. The cost of the merchandise sold was $5,740.
25		Purchased merchandise from Clasps Inc. for $1,120, terms 3/10, n/30.
27		Paid Wilhelm Distributors in full, less discount.
29		Made refunds to cash customers for returned merchandise $135. The returned merchandise had cost $90.
31		Sold merchandise on account for $1,792, terms n/30. The cost of the merchandise sold was $1,162.

a) Journalize the 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.)

b) Post the transactions to T-accounts. Be sure to enter the beginning cash and commo stock balances. (Post entries in the order of journal entries posted in part 1.)

c) Prepare an income statement through gross profit for the month of May 2014.

Answer 1