Question

Problem 5-2A Latona Hardware Store completed the following merchandising transactions in the month of May. At the beginning of May, the ledger of Latona Hardware Store showed Cash of $5,000 and Common Stock of $5,000. May 1 Purchased merchandise on account from Gray's Wholesale Supply $4,200, terms 2/10, n/30. 2 Sold merchandise on account $2,100, terms 1/10, n/30. The cost of the merchandise sold was $1,300. 5 Received credit from Gray's Wholesale Supply for merchandise returned $300. 9 Received collections in full, less discounts, from customers billed on sales of $2,100 on May 2. 10 Paid Gray's Wholesale Supply in full, less discount. 11 Purchased supplies for cash $400. 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 $130. 24 Sold merchandise for cash $3,200. The merchandise sold had a cost of $2,000. 25 Purchased merchandise on account from Horvath, Inc. $620, FOB destination, terms 2/10, n/30. 27 Paid Amland Distributors in full, less discount. 29 Made refunds to cash customers for defective merchandise $70. The returned merchandise had a fair value of $30. 31 Sold merchandise on account $1,000, terms n/30. The cost of the merchandise sold was $560. Latona Hardware Store '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. Journalize the transactions using a perpetual inventory system. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter "O" for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit

Answer 1

Date	Account Titles and Explanation	Debit	Credit
May-01	Inventory	4200
	Accounts payable		4200
	(To record merchandise purchased on account)
May-02	Accounts receivable	2100
	Sales revenue		2100
	(To record credit sale)
May-02	Cost of goods sold	1300
	Inventory		1300
	(To record cost of merchandise sold)
May-05	Accounts payable	300
	Inventory		300
	(To record credit for merchandise returned)
May-09	Cash	2079
	Sales discounts (1% x $2100)	21
	Accounts receivable		2100
	(To record collection on account)
May-10	Accounts payable ($4200 - $300)	3900
	Inventory (2% x $3900)		78
	Cash		3822
	(To record payment on account)
May-11	Supplies	400
	Cash		400
	(To record supplies purchased for cash)
May-12	Inventory	1400
	Cash		1400
	(To record merchandise purchased for cash)
May-15	Cash	150
	Inventory		150
	(To record refund received on merchandise returned)
May-17	Inventory	1300
	Accounts payable		1300
	(To record merchandise purchased on account)
May-19	Inventory	130
	Cash		130
	(To record freight paid for merchandise purchased)
May-24	Cash	3200
	Sales revenue		3200
	(To record cash sales)
May-24	Cost of goods sold	2000
	Inventory		2000
	(To record cost of merchandise sold)
May-25	Inventory	620
	Accounts payable		620
	(To record merchandise purchased on account)
May-27	Accounts payable	1300
	Inventory (2% x $1300)		26
	Cash		1274
	(To record payment on account)
May-29	Sales returns and allowances	70
	Cash		70
	(To record refund given for merchandise returned)
May-29	Inventory	30
	Cost of goods sold		30
	(To record cost of merchandise returned)
May-31	Accounts receivable	1000
	Sales revenue		1000
	(To record credit sale)
May-31	Cost of goods sold	560
	Inventory		560
	(To record cost of merchandise sold)

Cash
Date	Explanation	Ref	Debit	Credit	Balance
May-01	Balance	√			5000
May-09		J1	2079		7079
May-10		J1		3822	3257
May-11		J1		400	2857
May-12		J1		1400	1457
May-15		J1	150		1607
May-19		J1		130	1477
May-24		J1	3200		4677
May-27		J1		1274	3403
May-29		J1		70	3333
Accounts Receivable
Date	Explanation	Ref	Debit	Credit	Balance
May-02		J1	2100		2100
May-09		J1		2100	0
May-31		J1	1000		1000
Inventory
Date	Explanation	Ref	Debit	Credit	Balance
May-01		J1	4200		4200
May-02		J1		1300	2900
May-05		J1		300	2600
May-10		J1		78	2522
May-12		J1	1400		3922
May-15		J1		150	3772
May-17		J1	1300		5072
May-19		J1	130		5202
May-24		J1		2000	3202
May-25		J1	620		3822
May-27		J1		26	3796
May-29		J1	30		3826
May-31		J1		560	3266
Supplies
Date	Explanation	Ref	Debit	Credit	Balance
May-11		J1	400		400
Accounts Payable
Date	Explanation	Ref	Debit	Credit	Balance
May-01		J1		4200	4200
May-05		J1	300		3900
May-10		J1	3900		0
May-17		J1		1300	1300
May-25		J1		620	1920
May-27		J1	1300		620
Common Stock
Date	Explanation	Ref	Debit	Credit	Balance
May-01	Balance	√			5000
Sales Revenue
Date	Explanation	Ref	Debit	Credit	Balance
May-02		J1		2100	2100
May-24		J1		3200	5300
May-31		J1		1000	6300
Sales Returns and Allowances
Date	Explanation	Ref	Debit	Credit	Balance
May-29		J1	70		70
Sales Discounts
Date	Explanation	Ref	Debit	Credit	Balance
May-09		J1	21		21
Cost of Goods Sold
Date	Explanation	Ref	Debit	Credit	Balance
May-02		J1	1300		1300
May-24		J1	2000		3300
May-29		J1		30	3270
May-31		J1	560		3830

LATONA HARDWARE STORE
Income Statement
For the Month Ended May 31, 2015
Sales revenue		6300
Less:
Sales returns and allowances	70
Sales discounts	21	91
Net sales revenue		6209
Cost of goods sold		3830
Gross profit $		2379