Question

HUIUI Kern's Book Warehouse using a perpetual inventory system. 2A (LO 2, 3, 5) Financial Statemen dising transactions in the month of Mount Renner Hardwa $5,000 and Owner's Capital of $5,000. ne Renner Hardware Store completed the following merchan- At the beginning of May, the ledger of Renner showed Cash of Purchased merchandise on account from Braun's Wholesale Supply $4,200, terms 2/10, Journalize, po May 1 Purchase GLS 5 o 10 11 12 15 12 n/30. Sold merchandise on account $2,100, terms 1/10, 1/30. The cost of the merchandise sold was $1,300. Received credit from Braun's Wholesale Supply for merchandise returned $300. Received collections in full, less discounts, from customers billed on sales of $2,100 on May 2. Paid Braun's Wholesale Supply in full, less discount. Purchased supplies for cash $400. Purchased merchandise for cash $1,400. Received refund for poor quality merchandise from supplier on cash purchase $150. Purchased merchandise from Valley Distributors $1,300, FOB shipping point, terms 2/10. n/30 Paid freight on May 17 purchase $130. Sold merchandise for cash $3,200. The merchandise sold had a cost of $2,000. Purchased merchandise on account from Lumley, Inc. $620, FOB destination, terms 2010. n/30 Paid Valley Distributors in full, less discount. Made refunds to cash customers for defective merchandise $70. The returned merchandise had a fair value of $30. Sold merchandise on account $1,000 terms n/30. The cost of the merchandise sold was $560 19 24 25 27 29 31. Renner 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. 301 Owner's Capital No. 401 Sales Revenue, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, and No. 505 Cost of Goods Sold. Instructions a. Journalize the transactions using a perpetual inventory system. 0. Enter the beginning cash and capital balances and post the transactions. (Use Jl for the journal reference.) C Prepare an income statement through gross profit for the month of May 2020 C. Gross profi

Answer 1

Solution:

1)

Date	Particulars	Debit	Credit
May-01	Merchandise inventory	4200
	Accounts Payable		4200
May-02	Accounts Receivable	2100
	Sales		2100
	Cost of goods Sold	1300
	Merchandise inventory		1300
May-05	Accounts Payable	300
	Merchandise inventory		300
May-09	Cash	2079
	Sales discount	21
	Accounts receivable		2100
May-10	Accounts Payable	3900
	Merchandise Inventory		78
	Cash		3822
May-11	Supplies	400
	Cash		400
May-12	Merchandise Inventory	1400
	Cash		1400
May-15	Cash	150
	Merchandise Inventory		150
May-17	Merchandise inventory	1300
	Accounts Payable		1300
May-19	Merchandise inventory	130
	Cash		130
May-24	Accounts Receivable	3200
	Sales		3200
	Cost of goods Sold	2000
	Merchandise inventory		2000
May-25	Merchandise inventory	620
	Cash		620
May-27	Accounts Payable	1300
	Merchandise inventory		26
	Cash		1274
May-29	Sales return & allowances	70
	Cash		70
	Merchandise inventory	30
	Cost of goods Sold		30
May-31	Accounts Receivable	1000
	Sales		1000
	Cost of goods sold	560
	Merchandise inventory		560

2)

Date	Reference	Debit	Credit	Balance
01-May	J1			5,000
09-May	J1	2,079		2,921
10-May	J1		3,822	6,743
11-May	J1		400	7,143
12-May	J1		1,400	8,543
15-May	J1	150		8,393
19-May	J1		130	8,523
25-May	J1		620	9,143
27-May	J1		1,274	10,417
29-May	J1		70	10,487

3) Income Statement

Sales Revenues
Sales		6,300
Less Sales Returns and Allowances	70
Less Sales Discounts	21	91
Net Sales		6,209
Cost of Goods Sold		-3,830
Gross Profit		2,379

************

Cash Explanation Balance No. 101 Balance Inventory Date Debit Credit Explanation Date May Credit Debit 4,200 May No. 120 Balance 4,200 2,900 2,600 1 5,000 2,079 1,300 300 3,822 400 1,400 2,522 3,922 1,400 150 7,079 3,257 2,857 1,457 1,607 1,477 4,677 3,403 3,333 3,772 5,072 1,300 130 130 5,202 3,200 2,000 1,274 70 26 3,202 3,822 3,796 3,826 3,266 Accounts Receivable Explanation No. 112 Balance 560 Credit Date May Debit 2,100 2 2,100 2,100 No. 126 Balance 1,000 Supplies Date May 11 Explanation Credit 1,000 Debit 400 400 Accounts Payable Date Explanation May 1 No. 201 Balance Debit Credit 4,200 Sales Returns and Allowances Date Explanation Debit May 29 7 0 Credit No. 412 Balance 70 4,200 3,900 300 3,900 1,300 1,300 Sales Discounts Date Explanation May 9 Credit No. 414 Balance 21 620 Debit 21 1,920 620 1,300 No. 505 Balance Cost of Goods Sold Date Explanation May Owner's Capital Date Explanation May 1 Balance Credit Debit No. 301 Balance 5,000 Credit Debit 1,300 2,000 1,300 3,300 30 3,270 560 3,830 Sales Revenue Date Explanation May 2 Debit Credit 2,100 3,200 1,000 No. 401 Balance 2,100 5,300 6,300