In: Accounting
At the beginning of September 2021, Stojanovic Distributing Company's ledger showed Cash $12,500, Merchandise Inventory $7,500, and D. Stojanovic, Capital, $20,000. Stojanovic uses the perpetual inventory system and the earnings approach. During the month of September, the company had the following selected transactions: Record and post inventory transactions—perpetual system and earnings approach. Prepare partial income statement. Sept. 2 Purchased $13,500 of merchandise inventory from Moon Supply Co., terms 1/15, n/30, FOB destination. 4 The correct company paid $325 cash for freight charges on the September 2 purchase. 5 Sold merchandise inventory to Brandon Retailers for $18,000. The cost of the merchandise was $11,310 and the terms were 2/10, n/30, FOB destination. 6 Issued a $1,400 credit for merchandise returned by Brandon Retailers. The merchandise originally cost $890 and was returned to inventory. 6 The correct company paid $420 freight on the September 5 sale. 8 Purchased $900 of supplies for cash. 10 Purchased $6,450 of merchandise inventory from Tina Wholesalers, terms 2/10, n/30, FOB shipping point. 10 The correct company paid $150 freight costs on the purchase from Tina Wholesalers. 12 Received a $450 credit from Tina Wholesalers for returned merchandise. 15 Paid Moon Supply Co. the amount due. 15 Collected the balance owing from Brandon Retailers. 19 Sold merchandise for $10,875 cash. The cost of this merchandise was $6,855. 20 Paid Tina Wholesalers the balance owing from the September 10 purchase. 25 Made a $750 cash refund to a cash customer for merchandise returned. The returned merchandise had a cost of $470. The merchandise was damaged and could not be resold. 30 Sold merchandise to Dragen & Company for $6,420, terms n/30, FOB shipping point. Stojanovic's cost for this merchandise was $4,050. Instructions a. Record the transactions assuming Stojanovic uses a perpetual inventory system. b. Set up general ledger accounts for Merchandise Inventory, Sales, Sales Returns and Allowances, Sales Discounts, and Cost of Goods Sold. Enter the beginning Merchandise Inventory balance, post the transactions, and calculate the balances for each account. c. Prepare a partial multiple-step income statement, up to gross profit, for the month of September 2021.
As per the given question,
Part-1)
Date Particulars Debit Credit
Sep-02 Merchandise Inventory
$13,500
Account Payable
$13,500
Sep-04 Freight out $325
Cash $325
Sep-05 Account Receivable
$18,000
Sales
$18,000
Sep-05 Cost of Goods Sold
$11,310
Merchandise Inventory
$11,310
Sep-06 Sales Returns And Allowance
$1,425
Account Receivable
$1,425
Sep-06 Merchandise Inventory
$890
Cost of Goods Sold
$890
Sep-06 Freight Out $420
Cash $420
Sep-08 Supplies $900
Cash $900
Sep-10 Merchandise Inventory
$6,450
Account Payable
$6,450
Sep-10 Freight In $150
Cash $150
Sep-12 Account Payable $450
Merchandise Inventory
$450
Sep-15 Account Payable $13,500
Merchandise Inventory
$135
Cash
$13,365
Sep-15 Cash $16,244
Sales Discount $331
Account Receivable
$16,575
Sep-19 Cash $10,875
Sales
$10,875
Cost of Goods Sold $6,855
Merchandise Inventory
$6,855
Sep-20 Account Payable $6,000
Merchandise Inventory
$120
Cash $5,880
Sep-25 Sales Returns And Allowance
$750
Cash $750
Sep-30 Account Receivable
$6,420
Sales
$6,420
Cost of Goods Sold $4,050
Merchandise Inventory
$4,050
Part-2) Enclosed
Part-3)
Multi-step Income Statement
Sales Revenue
Sales $35,295
Minus: Sales Returns and Allowance $2,175
Sales Discount $332 $2,507
Net Sales $32,788
Cost of Goods Sold
$21,325
Gross Profit $11,463
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