Question

Goods tions for the month of June for Kern's Book Warehouse using a per Instructions nalize the transactions ntory system. Journalize the petual inventor Hardware Store completed the following merchandising transactions in Jou At the beginning of May, the ledger of Renner showed Cash of $5,000 ap P5.2A Renner Hard the month of May. A Owner's Capital of $5,000 and Owner's ased merchandise on account from Braun's Wholes May 1 Purchased terms 2/10, n/30. Sold merchandise handise on account $2,100, terms 1/10, n/30. The cost of the 2 merchandise sold was $1,300. credit from Braun's Wholesale Supply for merchandise returned 5 Received credit from $300. 9 Received collections in 10 Paid Braun's Wholes ed collections in full, less discounts, from customers billed on sales of $2,100 on May 2. Braun's Wholesale Supply in full, less discount. 1 Purchased supplies for cash $400. Purchased merchandise for cash $1,400. Deceived 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. 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 from Lumley, Inc. $620, FOB destination, terms 2/10, n/30. 120

Answer 1

1.
KERN'S BOOK WAREHOUSE
Journal entries for the month of May
Date	Ref#	Account Title	Debit	Credit
May 1		Inventory	$4,200
		Accounts Payable		$4,200
		(to record purchase of merchandise on account from Braun's Warehouse Supply)
May 2	J1	Cost of Goods Sold	$1,300
		Inventory		$1,300
		(to record the cost of merchandise sold)
May 2	J2	Accounts Receivable	$2,100
		Sales Revenue		$2,100
		(to record merchandise sold on account)
May 5	J3	Accounts Payable	$300
		Inventory		$300
		(to record credit received from Braun's Warehouse Supply for merchandise
		returned)
May 9	J4	Cash	$2,058
		Sales Discount	$42
		Accounts Receivable		$2,100
		(to record the amount collected from customer and discount allowed @ 2% as
		per the payment terms)
May 10	J5	Accounts Payable	$3,900
		Cost of Goods Sold		$78
		Cash		$3,822
		(to record the amount paid to Braun's Warehouse Supply and record the discount
		received)
May 11	J6	Supplies	$400
		Cash		$400
		(to record purchase of supplies)
May 12	J7	Inventory	$1,400
		Cash		$1,400
		(to record purchase of merchandise for cash)
May 15	J8	Cash	$150
		Inventory		$150
		(to record refund for poor quality merchandise from supplier on cash purchase)
May 17	J9	Inventory	$1,300
		Accounts Payable		$1,300
		(to record merchandise purchased from Valley Distributors on FOB shipping point)
May 19	J10	Inventory	$150
		Cash		$150
		(to record freight paid on merchandise purchased from Valley Distributors)
May 24	J11	Cost of Goods Sold	$2,000
		Inventory		$2,000
		(to record the cost of merchandise sold)
May 24	J12	Cash	$3,200
		Sales Revenue		$3,200
		(to record sale of merchandise for cash)
May 25	J13	Inventory	$620
		Accounts Payable		$620
		(to record purchase of merchandise from Lumley Inc., on FOB destination)
May 27	J14	Accounts Payable	$1,300
		Cost of Goods Sold		$26
		Cash		$1,274
		(to record the amount paid to Valley Distributors and record the discount received)
May 29	J15	Sales Returns and Allowances	$70
		Cash		$70
		(to record the refund to cash customers for defective merchandise)
May 29	J16	Inventory	$30
		Cost of Goods Sold		$30
		(to record the return of defective merchandise from cash customers)
May 31	J17	Accounts Receivable	$1,000
		Sales Revenue		$1,000
		(to record the sale of merchandise on account)
May 31	J18	Cost of Goods Sold	$560
		Inventory		$560
		(to record the cost of merchandise sold)

2.
Cash
Date	Description	Ref	Debit	Credit
May 1	Beginning Balance		$5,000
May 9	Accounts Receivable	# J4	$2,058
May 10	Accounts Payable	# J5		$3,822
May 11	Supplies	# J6		$400
May 12	Inventory	# J7		$1,400
May 15	Inventory	# J8	$150
May 19	Inventory	# J10		$150
May 24	Sales Revenue	# J12	$3,200
May 27	Accounts Payable	# J14		$1,274
May 29	Sales Returns and Allowances	# J15		$70
May 31	Ending Balance			$3,292
			$10,408	$10,408
Capital
Date	Description	Ref	Debit	Credit
May 1	Beginning Balance		$5,000
May 2	Cost of Goods Sold	# J1		$1,300
May 2	Sales Revenue	# J2	$2,100
May 9	Sales Discount	# J4		$42
May 10	Cost of Goods Sold	# J5	$78
May 24	Cost of Goods Sold	# J11		$2,000
May 24	Sales Revenue	# J12	$3,200
May 27	Cost of Goods Sold	# J14	$26
May 29	Sales Returns and Allowances	# J15		$70
May 29	Cost of Goods Sold	# J16	$30
May 31	Sales Revenue	# J17	$1,000
May 31	Cost of Goods Sold	# J18		$560
May 31	Ending Balance			$7,462
			$11,434	$11,434

3.
KERN'S BOOK WAREHOUSE
Income Statement for the month of May 2017
Account Title	Value	Value
Sales Revenue	$6,300
Less:
Sales Returns and Allowances	($70)
Sales Discounts	($42)
Net Sales Revenue		$6,188
Cost of Goods Sold		$3,726
Gross Profit		$2,462