Answered: Purchased merchandise on account from…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Ivanhoe Hardware Store completed the following merchandising transactions in the month of May. At the beginning of May, the ledger of Ivanhoe showed Cash of $5,500 and Owner’s Capital of $5,500.

May 1		Purchased merchandise on account from Braun’s Wholesale Supply for $4,500, terms 2/10, n/30.
2		Sold merchandise on account $1,800, terms 1/10, n/30. The cost of the merchandise sold was $1,500.
5		Received credit from Braun's Wholesale Supply for merchandise returned $300.
9		Received collections in full, less discounts, from customers billed on May 2.
10		Paid Braun's Wholesale Supply in full, less discount.
11		Purchased supplies for cash $400.
12		Purchased merchandise for cash $1,500.
15		Received $150 refund for return of poor-quality merchandise from supplier on cash purchase.
17		Purchased merchandise on account from Valley Distributors for $1,400, terms 2/10, n/30,FOB shipping point.
19		Paid freight on May 17 purchase $200.
24		Sold merchandise for cash $3,200. The merchandise sold had a cost of $2,200.
25		Purchased merchandise on account from Lumley, Inc. for $700, terms 2/10, n/30.
27		Paid Valley Distributors in full, less discount.
29		Made refunds to cash customers for returned merchandise $80. The returned merchandisecost $40.
31		Sold merchandise on account for $1,500 terms n/30. The cost of the merchandise sold was $500.

Ivanhoe 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.

1. Journalize the transactions using a perpetual inventory system.

2. Enter the beginning cash and capital balances and post the transactions.

3. Prepare a multiple-step income statement through gross profit for the month of May 2022. (Use the ledger balances from part b and assume that no adjustments are necessary.)

(For question #2, I included the specific table format)

Owner's Capital
No.
Date
Explanation Ref.
Debit
Credit
Balance
Balance
Sales Revenue
No.
Date
Explanation Ref.
Debit
Credit
Balance
JI
J1
JI
Sales Returns and Allowances
No.
Date
Explanation Ref.
Debit
Credit
Balance
JI
Sales Discounts
No.
Date
Explanation Ref.
Debit
Credit
Balance
JI
Cost of Goods Sold
No.
Date
Explanation Ref.
Debit
Credit
Balance
JI
JI
JI
JI

Cash
No.
Date
Explanation Ref.
Debit
Credit
Balance
Balance
JI
JI
JI
JI
J1
J1
JI
J1
JI
Accounts Recelvable
No
Date
Explanation Ref.
Debit
Credit
Balance
JI
J1
J1
Inventory
No.
Date
Explanation Ref.
Debit
Credit
Balance
JI
J1
J1
J1
J1
J1
J1
J1
J1
JI
J1
J1
JI
Supplies
No.
Date
Explanation Ref.
Debit
Credit
Balance
JI
Accounts Payable
No.
Date
Explanation Ref.
Debit
Credit
Balance
JI
J1
JI
JI
J1
J1
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