Chapter 13, Problem 13.1P

Current Operating Liabilities. James Stores, Inc. completed the following transactions during the current year the company’s first year of operations. James Stores has a December 31 year-end.

1. 1. January 16: Purchased $546,000 of merchandise inventory from various suppliers on account (no discount for early payment offered).
2. 2. February 1: Sold merchandise that cost $100,000 for $120,500 on account. The sales tax rate is 8%
3. 3. February 10: Paid half of the January 16 purchases.
4. 4. February 16: Paid the remaining balance of accounts payable from the January 16 purchase.
5. 5. March 1: Paid the sales taxes recorded on February 1.
6. 6. June 1: Sold merchandise that cost $212,000 for $300,000 on account. The sales tax rate is 8%.

Required

1. a. Prepare the journal entries required to record the transactions in the preceding list. Assume that a perpetual inventory system is used.
2. b. Prepare a partial income statement for the current fiscal year.