Question

P5-SA Eagle Hardware Store Ltd. completed the following merchandising transactions in the morith 8l the beginning of May, Eagle's ledger showed Cash $7,000; Accounts Receivable $1,500; Inventory $3,500; Common Shares $8,000; and Retained Earnings $4,000. Eagle Hardware uses a perpetual inventory system. tions anc financia (L0 2,3 Purchased merchandise on account from Depot Wholesale Supply Ltd. for $5,800, terms 1/10, n/30, FOB shipping point. Freight charges of $145 were paid by the appropriate party on the merchandise purchased on May 1. Sold merchandise on account to Shep Ltd. for $3,500, terms 2/10, n/30, FOB destination. The cost of the merchandise was $2,100. May 1 3 Freight charges of $90 were paid by the appropriate party on the May 4 sale. 8 7 Received a $200 credit from Depot Wholesale Supply when merchandise was returned. Paid Depot Wholesale Supply in full. Purchased supplies for $400 cash. Received payment in full from Shep Ltd. for merchandise sold on account on May 4. Collected $1,000 of the accounts receivable outstanding at the beginning of the month. All 11 14 15 accounts were originally sold on terms of n/30, with no sales discounts. Purchased merchandise from Harlow Distributors Inc. for $2,000, terms n/30, FOB destination. 18 Freight of $50 was paid by the appropriate party on the May 18 purchase of merchandise. 21 Sold merchandise to various customers for $6,500 cash. The cost of the merchandise was $3,900. 22 Paid a $100 cash refund to customers for returned merchandise. The cost of the returned 29 merchandise was $60. It was restored to inventory A physical inventory count was taken and determined that there was $5,100 of inventory on hand. 31 Prepare any adjustment required. Instructions a) Record the May transactions. (b) Set up T accounts, enter the opening balances, and post the transactions recorded in part (a).

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. Part a Part b Date Accounts Debit Credit May 1 May 14 May 15 May 22 $ $ May 1 $ 5,800 Inventory Accounts Payable Cash 7,000 May 3 3,430 May 7 1,000 May 9 6,500 May 11 May 29 11,651 145 90 5,544 400 100 $ 5,800 $ May 3 $ 145 May 31 $ Inventory Cash $ 145 May 4 $ 3,500 Accounts Receivable Sales Accounts Receivable 1,500 May 14 3,500 May 15 500 May 1 May 4 May 31 $ $ 3,500 1,000 $ 3,500 May 4 $ 2,100 Cost of Goods Sold Inventory $ 2,100 $ 2,100 200 May 7 $ 90 Freight Out Cash $ 90 Inventory 3,500 May 4 5,800 May 8 145 May 9 2,000 May 22 60 May 31 5,100 S May 1 May 1 May 3 May 18 May 29 May 31 56 3,900 149 May 8 $ 200 $ Accounts Payable Inventory $ 200 May 9 $ 5,600 Accounts Payable ($5,800 - $200) Inventory ($5,600 x 1%) Cash $ 56 $ 5,544 May 11 May 31 $ $ Supplies 400 400 May 11 $ 400 Supplies Cash $ 400 Common Shares May 1 May 31 $ $ 8,000 8,000 May 14 Cash ($3,500-$70) Sales Discounts ($3,500x2%) Accounts Receivable $ 3,430 $ 70 $ 3,500 May 8 May 9 $ $ Accounts Payable 200 May 1 5,600 May 18 May 31 $ $ $ 5,800 2,000 2,000 May 15 $ 1,000 Cash Accounts Receivable $ 1,000

May 18 $ 2,000 Inventory Accounts Payable Sales May 4 May 22 May 31 $ 2,000 $ $ $ 3,500 6,500 10,000 May 21 No entry required (freight paid by Harlow) May 22 $ 6,500 Cash Sales May 29 May 31 Sales Returns and Allowances $ 100 $ 100 $ 6,500 May 22 $ 3,900 Cost of Goods Sold Inventory $ 3,900 May 14 May 31 Sales Discounts 70 70 $ May 29 $ 100 Sales Returns and Allowances Cash $ 100 Freight Out 90 $ May 29 $ May 7 May 31 60 90 Inventory Cost of Goods Sold $ 60 May 31 $ 149 $ 60 $ 149 Cost of Goods Sold Inventory ($5,249* - $5,100 = $149 shortage) $3,500 + $5,800 + $145-$2,100 - $200 - $56 + $2,000 - $3,900 + $60 = $5,249 May 4 May 22 May 31 May 31 Cost of Goods Sold 2,100 May 29 3,900 149 6,089 Part c $ 10,000 Retained Earnings May 1 May 31 $ $ 4,000 4,000 $ $ 100 70 Sales Less: Sales return and allowance Sales Discounts Net sales Cost of goods sold Gross profit $ (170) $ 9,830 $ (6,089) $ 3,741 Part d Assets: Current assets: Cash Accounts receivable Inventory Supplies $ 11,651 $ 500 $ 5,100 $ 400 Total current assets $ 17,651