Question

Krey Distributing Company completed these merchandising transactions in the month of April. At the beginning of April, the ledger of Krey showed Cash of $10,000 and Common Stock of $10,000.

Apr. 2 Purchased merchandise on account from Am-Bev Co. $8,700, terms 2/10, n/30.
4 Sold merchandise on account to Gata, Inc. $6,000, terms 2/10, n/30, FOB Destination. The cost of the merchandise sold was $3,700.
5 Paid $200 freight by check on April 4 sale.
6 Received credit from Am-Bev Co. for merchandise returned $400.
11 Paid Am-Bev Co. in full, less discount.
13 Received collections in full, less discounts, from Gata, Inc., billed on April 4.
14 Purchased merchandise from Flug, Inc. for cash $4,700. No shipping costs incurred.
16 Received refund of $500 from Flug, Inc. for returned merchandise on cash purchase of April 14.
18 Purchased merchandise from Lohr Distributors $5,500, terms 2/10, n/30, FOB Shipping Point.
20 Paid freight by check on April 18 purchase $180.
23 Sold merchandise for cash to Kirkja, Inc. for $8,300. The cost of the merchandise sold was $5,580.
26 Purchased merchandise for cash from Silung, Inc. for $2,300.
27 Paid Lohr Distributors in full, less discount.
29 Made refunds to various cash customers for returned merchandise $180. The returned merchandise had a cost of $120.
30 Sold merchandise on account to Frimirki, Inc. $3,980, terms n/30. The cost of the merchandise sold was $2,500. No shipping charges.

Krey Distributing Company’s chart of accounts includes Cash, Accounts Receivable, Inventory, Accounts Payable, Common Stock, Sales Revenue, Sales Returns and Allowances, Sales Discounts, Cost of Goods Sold, and Freight-Out. Instructions

(a) Journalize the transactions.

(b) Prepare the income statement through gross profit for the month of April 2014.

Answer 1

Please find below spreadsheet useful to derive desired results: -