Question

P5-4A Adam Nichols, a former disc golf star, operates Adam’s Discorama. At the beginning of the current season on April 1, the ledger of Adam’s Discorama showed Cash $1,800, Inventory $2,500, and Common Stock $4,300. The following transactions were completed during April.
Apr. 5 Purchased golf discs, bags, and other inventory on account from Rayford Co. $1,200, FOB shipping point, terms 2/10, n/60. 7 Paid freight on the Rayford purchase $50. 9 Received credit from Rayford Co. for merchandise returned $100. 10 Sold merchandise on account for $900, terms n/30. The merchandise sold had a cost of $540. 12 Purchased disc golf shirts and other accessories on account from Galaxy Sportswear $670, terms 1/10, n/30. 14 Paid Rayford Co. in full, less discount. 17 Received credit from Galaxy Sportswear for merchandise returned $70. 20 Made sales on account for $610, terms n/30. The cost of the merchandise sold was $370. 21 Paid Galaxy Sportswear in full, less discount. 27 Granted an allowance to customers for clothing that was fl awed $20. 30 Received payments on account from customers $900. The chart of accounts for the store includes the following: No. 101 Cash, No. 112 Accounts Receivable, No. 120 Inventory, No. 201 Accounts Payable, No. 311 Common Stock, No. 401 Sales Revenue, No. 412 Sales Returns and Allowances, and No. 505 Cost of Goods Sold. Instructions (a) Journalize the April transactions using a perpetual inventory system. (b) Enter the beginning balances in the ledger accounts and post the April transactions. (Use J1 for the journal reference.) (c) Prepare a trial balance on April 30, 2015.

Answer 1

a.

Adams' Discorama
General journal for the month of April
Date	Account Title	Debit	Credit
4/5	Inventory	1200
	Accounts Payable		1200
	(Purchase of goods on account)
4/7	Inventory	50
	Cash		50
	(Freight charges paid on purchases)
4/9	Accounts Payable	100
	Inventory		100
	(Credit received for goods returned to supplier)
4/10	Accounts Receivable	900
	Sales Revenue		900
	(Sales of goods on account)
4/10	Cost of goods sold	540
	Inventory		540
	(Cost of goods sold )
4/12	Inventory	670
	Accounts Payable		670
	(Purchase of goods on account)
4/14	Accounts Payable	1100
	Inventory		22
	Cash		1078
	(Payment to suppliers on account)
4/17	Accounts Payable	70
	Inventory		70
	(Credit received for goods returned to supplier)
4/20	Accounts Receivable	610
	Sales Revenue		610
	(Sale of goods on account)
	Cost of goods sold	370
	Inventory		370
	(Cost of goods sold )
4/21	Accounts Payable	600
	Inventory		6
	Cash		594
	(Apayment made to Galaxy)
4/27	Sales returns and allowances	20
	Accounts Receivable		20
	(Allowance granted to customer)
4/30	Cash	900
	Accounts Receivable		900
	(Amount collected from customers)

b.

Cash

Accounts Receivable

Balance

Balance

Ref

Details

Debit

Credit

Debit

Credit

Ref

Details

Debit

Credit

Debit

Credit

4/1

Beg.Bal.

1800

4/1

Beg.Bal.

0

4/7

50

1750

4/10

900

900

4/14

1078

672

4/20

610

1510

4/20

594

78

4/27

20

1490

4/30

900

978

4/30

900

590

Inventory

Accounts Payable

Balance

Balance

Ref

Details

Debit

Credit

Debit

Credit

Ref

Details

Debit

Credit

Debit

Credit

4/1

Beg.Bal.

2500

4/1

Beg.Bal.

0

4/5

1200

3700

4/5

1200

1200

4/7

50

3750

4/9

100

1100

4/9

100

3650

4/12

670

1770

4/10

540

3110

4/14

1100

670

4/12

670

3780

4/17

70

600

4/14

22

3758

4/21

600

0

4/17

70

3688

4/20

370

3318

4/21

6

3312

Sales Revenue

Balance

Common Stock

Ref

Details

Debit

Credit

Debit

Credit

Balance

4/1

Beg.Bal.

0

Ref

Details

Debit

Credit

Debit

Credit

4/10

900

900

4/1

Beg.Bal.

4300

4/20

610

1510

4300

Sales Returns and allowances

Balance

Cost of goods sold

Ref

Details

Debit

Credit

Debit

Credit

Balance

4/1

Beg.Bal.

0

Ref

Details

Debit

Credit

Debit

Credit

4/27

20

20

4/1

Beg.Bal.

0

20

4/10

540

540

4/20

370

910

910

c.

College Coasters
Trial balance as at April 30
Account	Debit	Credit
Cash	978
Accounts Receivable	590
Inventory	3312
Accounts Payable		0
Common Stock		4300
sales Revenue		1510
Sales returns and allowances	20
Cost of goods sold	910
Total	5810	5810