Question

Problem 6-3A Record transactions and prepare a partial Income statement using a perpetual Inventory system (LO6-2, 6-5)

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At the beginning of July. CD City has a balance in inventory of $3,250. The following transactions occur during the month of July.

July 3 Purchase CDs on account fron hholesale Music for $2,150, teras 2 / 10, n / 30.

July 4 Pay cash for freight charges related to the July 3 purchase from Wholesale Music, $110.

July 9 Return incorrectly ordered CDs to Wholesale Music and receive credit, $300 .

July 11 Pay wholesale Music in full.

July 12 Sell CDs to customers on account, $5,500, which had a cost of $2,850.

July 15 Receive full payment from customers related to the sale on July 12 .

July 18 Purchase CDS on account fron Music Supply for $2,950, terms 2 / 10, n / 30.

July 22 Sell CDs to customers for cash, $4,050, that had a cost of $2,350.

July 28 Return CDS to Music Supply and receive credit of $270.

July 30 Pay Music Supply in ful1.

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Answer 1

LULLL LLLLLLLL Debit Credit 2,300 2,300 110 110 200 200 July 3 Inventory Accounts Payable (Purchase inventory on account) July 4 Inventory Cash (Pay freight-in) July 9 Accounts Payable Inventory (Return inventon on account) July 11 Accounts Payable Inventory Cash (Pay on account less 1% discount) (S21 = $2,200 x 196) July 12 Accounts Receivable Sales Revenue (Sell inventory on account) Cost of Goods Sold Inventory (Record cost of inventor sold) July 15 Cash Accounts Receivable (Receive cash on account) 2,100 21 2,079 5,800 5,800 3,000 3,000 5,800 5.800

Credit Debit 3,100 3,100 4,200 4,200 July 18 Inventory Accounts Payable (Purchase inventory on account July 22 Cash Sales Revenue (Sell inventory for cash) Cost of Goods Sold Inventory (Record cost of inventory sold) July 28 Accounts Payable Inventory (Return inventon on account) July 30 Accounts Payable Cash (Pay cash on accoun) 2,500 2,500 300 300 2,800 2,800

CD City Multiple-step Income Statement (partial) For the month of July |Net sales Cost of goods sold Gross profit $10,000 5,500 $ 4,500