Question

Required information Problem 6-3A Record transactions and prepare a partial income statement using a perpetual inventory system (LO6-2, 6-5) The following information applies to the questions displayed below.) At the beginning of July, CD City has a balance in inventory of $3,050. The following transactions occur during the month of July. July 3 Purchase CDs on account from Wholesale Music for $1,950, terms 2/10, n/30. July 4 Pay cash for freight charges related to the July 3 purchase from Wholesale Music, $100. July 9 Return incorrectly ordered CDs to Wholesale Munic and receive credit, $200. July 11 Pay Wholesale Music in full. July 12 Sell CDs to customers on account, $5, 100, that had a cost of $2,650. July 15 Receive full payment from customers related to the sale on July 12. July 18 Purchase CDs on account from Music Supply for $2,750, terms 2/10, n/30 July 22 Sell CDs to customers for cash, $3,850, that had a cost of $2,150. July 28 Return CDs to Music Supply and receive credit of $230. July 30 Pay Music Supply in full. Problem 6-3A Part 1 Required: 1. Assuming that CD City uses a perpetual inventory system, record the transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 2 3 4 5 6 7 8 ..... 12 > Record purchase of CDs on account from Wholesale Music for $1,950, terms 2/10, n/30. Note: Enter debits before credits. Date General Journal Debit Credit July 03 Record entry Clear entry View general journal

Answer 1

Requirement 1:

Date	Account title and Explanation	Debit	Credit
July 3	Inventory	$1,950
	Accounts payable		$1,950
	[To record purcahse of inventory on account]
July 4	Inventory	$100
	Cash		$100
	[To record payment of freight]
July 9	Accounts payable	$200
	Inventory		$200
	[To record purchase returns]
July 11	Accounts payable [1950-200]	$1,750
	Inventory   [1750 x 2%]		$35
	Cash		$1,715
	[To record cash paid to suppliers]
July 12	Accounts receivable	$5,100
	Sales revenue		$5,100
	[To record credit sales]
	Cost of goods sold	$2,650
	Inventory		$2,650
	[To record cost of goods sold]
July 15	Cash	$5,100
	Accounts receivable		$5,100
	[To record collections from customers]
July 18	Inventory	$2,750
	Accounts payable		$2,750
	[To record purcahse of inventory on account]
July 22	Cash	$3,850
	Sales revenue		$3,850
	[To record credit sales]
	Cost of goods sold	$2,150
	Inventory		$2,150
	[To record cost of goods sold]
July 28	Accounts payable	$230
	Inventory		$230
	[To record purchase returns]
July 30	Accounts payable [2750-230]	$2,520
	Cash		$2,520
	[To record cash paid for suppliers]

Requirement 2:

CD CITY
Multiple-Step Income Statement (partial)
For the month of July
Sales revenue (5100+3850)	$8,950
Cost of goods sold (2650+2150)	($4,800)
Gross profit	$4,150