Question

Problem 5-02A a-c (Video) Blossom Hardware Store completed the following merchandising transactions in the month of May. At the beginning of May, the ledger of Blossom showed Cash of $5,500 and Owner's Capital of $5,500. May 1 Purchased merchandise on account from Braun's Wholesale Supply $4,300, terms 2/10, 1/30. 2 Sold merchandise on account $2,000, terms 1/10, 1/30. The cost of the merchandise sold was $1,300. 5 Received credit from Braun's Wholesale Supply for merchandise returned $200. 9 Received collections in full, less discounts, from customers billed on sales of $2,000 on May 2. 10 Paid Braun's Wholesale Supply in full, less discount. 11 Purchased supplies for cash $300. 12 Purchased merchandise for cash $1,300 15 Received refund for poor quality merchandise from supplier on cash purchase $150. 17 Purchased merchandise from Valley Distributors $1,200, FOB shipping point, terms 2/10, 1/30. 19 Paid freight on May 17 purchase $100. 24 Sold merchandise for cash $3,000. The merchandise sold had a cost of $2,200. 25 Purchased merchandise on account from Lumley, Inc. $750, FOB destination, terms 2/10, 1/30. 27 Paid Valley 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 30. The cost of the merchandise sold was $500. Blossom 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

Answer 1

Date	Account Titles & Explanation	Debit	Credit
May 1	Merchandise Inventory	4300
	Accounts Payable		4300
	(To record credit purchase)
2	Accounts Receivable	2000
	Sales		2000
	(To record credit sale)
	Cost of Goods Sold	1300
	Merchandise Inventory		1300
	(To record cost of merchandise sold)
5	Accounts Payable	200
	Merchandise Inventory		200
	(To record purchases return)
9	Cash	1980
	Sales Discounts (2000 x 1%)	20
	Accounts Receivable		2000
	(To record payment received  from customers)
10	Accounts Payable	4100
	Merchandise Inventory ($4100 x 2%)		82
	Cash		4018
	(To record full Payment made to the Barun)
11	Supplies	300
	Cash		300
12	Merchandise Inventory	1300
	Cash		1300
15	Cash	150
	Merchandise Inventory		150
	(To record purchases return)
17	Merchandise Inventory	1200
	Accounts Payable		1200
	(To record credit purchase)
19	Merchandise Inventory	100
	Cash		100
24	Cash	3000
	Sales		3000
	(To record credit sale)
	Cost of Goods Sold	2200
	Merchandise Inventory		2200
	(To record cost of merchandise sold)
25	Merchandise Inventory	750
	Accounts Payable		750
	(To record credit purchase)
27	Accounts Payable	1200
	Merchandise Inventory		24
	Cash		1176
29	Sales Returns and Allowances	70
	Cash		70
	Merchandise Inventory	30
	Cost of Good Sold		30
31	Accounts Receivable	1000
	Sales		1000
	(To record credit sale)
	Cost of Goods Sold	500
	Merchandise Inventory		500
	(To record cost of merchandise sold)
(b) T-Accounts:
Cash
Date	Particulars	Ref.	Debit	Credit	Balance
May. 1	Opening Balance	✓			$5,500.00
May. 9		J1	$1,980.00		$7,480.00
May. 10		J1		$4,018.00	$3,462.00
May. 11		J1		$300.00	$3,162.00
May. 12		J1		$1,300.00	$1,862.00
May. 15		J1	$150.00		$2,012.00
May. 19		J1		$100.00	$1,912.00
May. 24		J1	$3,000.00		$4,912.00
May. 27		J1		$1,176.00	$3,736.00
May. 29		J1		$70.00	$3,666.00
Accounts Receivable
Date	Particulars	Ref.	Debit	Credit	Balance
May. 2		J1	$2,000.00		$2,000.00
May. 9		J1		$2,000.00	$0.00
May. 31		J1	$1,000.00		$1,000.00
Merchandise inventory
Date	Particulars	Ref.	Debit	Credit	Balance
May. 1		J1	$4,300.00		$4,300.00
May. 2		J1		$1,300.00	$3,000.00
May. 5		J1		$200.00	$2,800.00
May. 10		J1		$82.00	$2,718.00
May. 12		J1	$1,300.00		$4,018.00
May. 15		J1		$150.00	$3,868.00
May. 17		J1	$1,200.00		$5,068.00
May. 19		J1	$100.00		$5,168.00
May. 24		J1		$2,200.00	$2,968.00
May. 25		J1	$750.00		$3,718.00
May. 27		J1		$24.00	$3,694.00
May. 29		J1	$30.00		$3,724.00
May. 31		J1		$500.00	$3,224.00
Supplies
Date	Particulars	Ref.	Debit	Credit	Balance
May. 11		J1	$300.00		$300.00
Accounts Payable
Date	Particulars	Ref.	Debit	Credit	Balance
May. 1		J1		$4,300.00	$4,300.00
May. 5		J1	$200.00		$4,100.00
May. 10		J1		$4,100.00	$8,200.00
May. 17		J1		$1,200.00	$9,400.00
May. 25		J1		$750.00	$10,150.00
May. 27		J1	$1,200.00		$8,950.00
Common Stock
Date	Particulars	Ref.	Debit	Credit	Balance
May. 1	Opening Balance	✓			$5,500.00
Sales Revenue
Date	Particulars	Ref.	Debit	Credit	Balance
May. 2		J1		$2,000.00	$2,000.00
May. 24		J1		$3,000.00	$5,000.00
May. 31		J1		$1,000.00	$6,000.00
Sales Returns and Allowances
Date	Particulars	Ref.	Debit	Credit	Balance
May. 29		J1	$70.00		$70.00
Sales Discount
Date	Particulars	Ref.	Debit	Credit	Balance
May. 9		J1	$20.00		$20.00
Cost of Goods Sold
Date	Particulars	Ref.	Debit	Credit	Balance
May. 2		J1	$1,300.00		$1,300.00
May. 24		J1	$2,200.00		$3,500.00
May. 29		J1		$30.00	$3,470.00
May. 31		J1	$500.00		$3,970.00
(c) Income statement:
Blossom Hardware Stores
Income Statement (partial)
Sales Revenue	$6,000.00
Less: Sales returns and allowances	-$70.00
Less: Sales discount	-$20.00
Net Sales		$5,910.00
Less: Cost of goods sold		-$3,970.00
Gross Profit		$1,940.00