Question

At the beginning of the current season on April 1, the ledger of Sunland Pro Shop showed Cash $3,100; Inventory $3,500; and Common Stock $6,600. The following transactions were completed during April 2022. Apr. 5 Purchased golf bags, clubs, and balls on account from Arnie Co. $2,600, terms 3/10, n/60. 7 Paid freight on Arnie purchase $80. 9 Received credit from Arnie Co. for merchandise returned $700. 10 Sold merchandise on account to members $1,470, terms n/30. The merchandise sold had a cost of $840. 12 Purchased golf shoes, sweaters, and other accessories on account from Woods Sportswear $950, terms 2/10, n/30. 14 Paid Arnie Co. in full. 17 Received credit from Woods Sportswear for merchandise returned $50. 20 Made sales on account to members $820, 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 $70. 30 Received payments on account from members $1,180.

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.)

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

A.

		Debit	Credit
April 5	Inventory Dr.	2600
	To accounts payable		2600
April 7	inventory dr.	80
	to cash		80
April 9	accounts payable Dr.	700
	to inventory		700
April 10	accounts receivable dr.	1470
	to sales revenue		1470
april 10	COGS Dr.	840
	to inventory		840
april 12	inventory dr.	950
	to accounts payable		950
april 14	accounts payable dr.	1900
	to sales return and allowances		57
	to cash		1843
april 17	accounts payable dr.	50
	to inventory		50
april 20	accounts receivable dr.	820
	to sales revenue		820
april 20	COGS dr.	550
	to inventory		550
april 21	accounts payable dr.	900
	to sales return and allowances		18
	to cash		882
april 27	sales return and allowances	70
	to accounts receivable		70
april 30	cash dr.	1180
	to accounts receivable		1180

B. Cash A/c

To bal	3100	By invenotry	80
to accounts receivable	1180	by accounts payable	1843
		by accounts payable	882
		by bal	1475

Inventory A/c

to bal	3500	by accounts payable	700
to accounts payable	2600	by cogs	840
to cash	80	by accounts payable	50
to accounts payable	950	by cogs	550
		by bal	4990

Common stock A/c

		By bal	6600
to bal	6600

Accounts payable A/c

to invenotry	700	By invenotry	2600
to sales return and allowances	57	by inventory	950
to cash	1843
to inventory	50
to sales return and allowances	18
to cash	882

Accounts receivable A/c

to sales revenue	1470	by sales return and allowances	70
to sales revenue	820	by cash	1180
		by bal	1040

Sales revenue A/c

		by accounts receivable	1470
		by accounts receivable	820
to bal	2290

COGS A/c

to inventory	840
to inventory	550	by bal	1390

sales return and allowances A/c

		by accounts payable	57
to accounts receivble	70	by accounts payable	18
to bal	5

C. Trial balance

	Debit	Credit
Cash	1475
inventory	4990
accounts receivable	1040
common stock		6600
sales revenue		2290
COGS	1390
Sales return and allowances		5
Total	8895	8895

D. Income statement

Sales revenue		2290
Add: Net Sales returns and allowances received		5
Net sales		2295
Less: COGS		(1390)
Gross Income		905