Question

sheridan hardware store completed the following merchandising transactions in the month of may. at the beginning of may, sheridans’ ledger showed cash of $7,600 and common stock of $7,600.

may 1 purchased merchandise on account from black wholesale supply for $7,600, terms 1/10, n/30. 2 sold merchandise on account for $4,000, terms 2/10, n/30. the cost of the merchandise sold was $2,900.

5 received credit from black wholesale supply for merchandise returned $200.

9 received collections in full, less discounts, from customers billed on may 2.

10 paid black wholesale supply in full, less discount. 11 purchased supplies for cash $900.

12 purchased merchandise for cash $2,700.

15 received $230 refund for return of poor-quality merchandise from supplier on cash purchase.

17 purchased merchandise from wilhelm distributors for $2,100, terms 2/10, n/30.

19 paid freight on may 17 purchase $250.

24 sold merchandise for cash $5,500. the cost of the merchandise sold was $4,100.

25 purchased merchandise from clasps inc. for $800, terms 3/10, n/30.

27 paid wilhelm distributors in full, less discount.

29 made refunds to cash customers for returned merchandise $128. the returned merchandise had cost $92.

31 sold merchandise on account for $1,280, terms n/30. the cost of the merchandise sold was $830.

Date Account Titles and Explanation Debit Credit May 1 4 Inventory 7600 Accounts Payable 7600 May 2 Accounts Receivable 4000 Sales Revenue (To record credit sale) Cost of Goods Sold Inventory 2900 (To record cost of merchandise sold) May 5 Accounts Payable Inventory May 9 Cash Sales Discounts Accounts Receivable May 10

Answer 1

Date	Account Titles	Debit	Credit
May-01	Inventory	$            7,600
	Accounts Payable		$            7,600
	(Purchased inventory on account)
May-02	Accounts Receivable	$            4,000
	Sales Revenue		$            4,000
	(Sales made on account)
	Cost of Goods Sold	$            2,900
	Inventory		$            2,900
	(Cost of goods sold)
May-05	Accounts Payable	$               200
	Inventory		$               200
	(Returned inventory)
May-09	Cash	$            3,920		=4000-80
	Sales Discount	$                  80		=4000*2%
	Accounts Receivable		$            4,000
	(Collected cash net of 2% discount)
May-10	Accounts Payable	$            7,400		=7600-200
	Cash		$            7,326	=7400-74
	Inventory		$                  74	=7400*1%
	(Cash paid on accounts net of 1% discount)
May-11	Supplies	$               900
	Cash		$               900
	(Purchased supplies)
May-12	Inventory	$            2,700
	Cash		$            2,700
	(Purchased inventory)
May-15	Cash	$               230
	Inventory		$               230
	(Refund for inventory returned)
May-17	Inventory	$            2,100
	Accounts Payable		$            2,100
	(Purchased inventory on account)
May-19	Inventory	$               250
	Cash		$               250
	(Paid freight in)
May-24	Cash	$            5,500
	Sales Revenue		$            5,500
	(Sales made for cash)
	Cost of Goods Sold	$            4,100
	Inventory		$            4,100
	(Cost of goods sold)
May-25	Inventory	$               800
	Accounts Payable		$               800
	(Purchased inventory on account)
May-27	Accounts Payable	$            2,100
	Cash		$            2,058	=2100-42
	Inventory		$                  42	=2100*2%
	(Cash paid on accounts net of 1% discount)
May-29	Sales returns and allowances	$               128
	Cash		$               128
	(Cash refund for return)
	Inventory	$                  92
	Cost of Goods sold		$                  92
	(Inventory added back)
May-31	Accounts Receivable	$            1,280
	Sales Revenue		$            1,280
	(Sales made on account)
	Cost of Goods Sold	$               830
	Inventory		$               830
	(Cost of goods sold)