Question

P5-7A

At the beginning of the current season, the ledger of Village Tennis Shop showed Cash $2,500; Merchandise Inventory $1,700; and Common Stock $4,200. The followingtransactions were completed during April.
Apr. 4 Purchased racquets and balls from Denton Co. $740, terms 3/10, n/30.
6 Paid freight on Denton Co. purchase $60.
8 Sold merchandise to members $900, terms n/30.
10 Received credit of $40 from Denton Co. for a damaged racquet that was returned.
11 Purchased tennis shoes from Newbee Sports for cash $300.
13 Paid Denton Co. in full.
14 Purchased tennis shirts and shorts from Venus's Sportswear $600, terms 2/10, n/60.
15 Received cash refund of $50 from Newbee Sports for damaged merchandise that was returned.
17 Paid freight on Venus's Sportswear purchase $30.
18 Sold merchandise to members $1,000, terms n/30.
20 Received $500 in cash from members in settlement of their accounts.
21 Paid Venus's Sportswear in full.
27 Granted an allowance of $30 to members for tennis clothing that did not fit properly.
30 Received cash payments on account from members $500.


The chart of accounts for the tennis shop includes Cash; Accounts Receivable; Merchandise Inventory; Accounts Payable; Common Stock; Sales; Sales Returns &Allowances; Purchases; Purchase Returns and Allowances; Purchase Discounts; and Freight-in.

Using T accounts, enter the beginning balances in the ledger accounts and post the April transactions. (If answer is zero, please enter 0. Do not leave any fieldsblank.)

Complete the income statement through gross profit, assuming merchandise inventory on hand at April 30 is $2,296. (List amounts from largest to smallest eg 10, 5, 3,2.)

Answer 1