Question

Latona Hardware Store completed the following merchandising transactions in the month of May. At the beginning of May, the ledger of Latona showed Cash of $4,500 and Common Stock of $4,500. May 1 Purchased merchandise on account from Gray's Wholesale Supply $4,500, terms 2/10, n/30. 2 Sold merchandise on account $2,000, terms 1/10, n/30. The cost of the merchandise sold was $1,400. 5 Received credit from Gray's Wholesale Supply for merchandise returned $250. 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 $1,400. 15 Received refund for poor quality merchandise from supplier on cash purchase $150. 17 Purchased merchandise from Amland Distributors $1,300, FOB shipping point, terms 2/10, n/30. 19 Paid freight on May 17 purchase $120. 24 Sold merchandise for cash $3,500. The merchandise sold had a cost of $1,900. 25 Purchased merchandise 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 $60. The returned merchandise had a fair value of $30. 31 Sold merchandise on account $1,500, terms n/30. The cost of the merchandise sold was $500.

Latona Hardware’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) Enter the beginning cash and common stock balances and post the transactions.

Answer 1

Cash Balance

Date	Debit	Credit	Balance
1-May			4500
9-May	1980		2520
10-May		4165	6685
11-May		300	6985
12-May		1400	8385
15-May	150		8235
19-May		120	8355
25-May		750	9105
27-May		1274	10379
29-May		60	10319

Common Stock

Accounts Receivable

2 may Dr. 2000

9 may Cr. 2000

24 may Dr. 3500

31 may Dr. 1500, Balance $5000

Sales

2 may Cr. 2000

24 may Cr. 3500

31 may Cr. 1500, Balance $7000

Sales Returns and Allowances
29 may Dr.60, Balance $60

Merchandise Inventory

1may Dr. 4500

2 may Cr. 1400

5 may Cr. 250

10 may Cr. 85

12 may Dr. 1400

15 may Cr. 150

17 may Dr. 1300

19 May Dr. 120

24 may Cr. 1900

25 may Dr. 750

27 may Cr. 26

29 may Dr. 30

31 my Cr. 500, Balance $3789

Sales Discounts
9 may, Balance $20

Cost of Goods Sold
2 may, Dr. 1400

24 may Dr. 1900

29 may Cr. 30

31 may Dr. 500, Balance $3770


Accounts Payable

1 may, Cr. 4500

5 may Dr. 250

10 may Dr. 4250

17 may Cr. 1300

27 may Dr. 1300, Balance $0

Kindly refer to the journal entries given below for debit and credit balance of Cash