Acct 281 Chapter 5 Accounting for Merchandising Operations

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Acct 281 Chapter 5 Accounting for Merchandising Operations
Journalize, post, and prepare trial balance and partial income statement using periodic approach.
(SO 7, 8)
*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 following transactions
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 and Allowances; Purchases;
Purchase Returns and Allowances; Purchase Discounts; and Freight-in.

Instructions

(a) Journalize the April transactions using a periodic inventory system.
(b) Using T accounts, enter the beginning balances in the ledger accounts and post the April
Transactions.
(c) Prepare a trial balance on April 30, 2008.
(d) Prepare an income statement through gross profit, assuming merchandise inventory on hand
at April 30 is $2,296.

Journalize perpetual inventory entries
E5-3 On September 1, Howe Office Supply had an inventory of 30 calculators at a cost of $18
each.The company uses a perpetual inventory system. During September, the following transactions
occurred.
Sept. 6 Purchased 80 calculators at $20 each from DeVito Co. for cash.
9 Paid freight of $80 on calculators purchased from DeVito Co.
10 Returned 2 calculators to DeVito Co. for $42 credit (including freight) because they
did not meet specifications.
12 Sold 26 calculators costing $21 (including freight) for $31 each to Mega Book Store,
terms n/30.
14 Granted credit of $31 to Mega Book Store for the return of one calculator that was not
ordered.
20 Sold 30 calculators costing $21 for $31 each to Barbara's Card Shop, terms n/30.

Instructions
Journalize the September transactions

Journalize purchase transactions.
*E5-16 This information relates to Martinez Co.

1. On April 5 purchased merchandise from D. Norlan Company for $20,000, terms 2/10, net/30,
FOB shipping point.
2. On April 6 paid freight costs of $900 on merchandise purchased from D. Norlan Company.
3. On April 7 purchased equipment on account for $26,000.
4. On April 8 returned some of April 5 merchandise to D. Norlan Company which cost $2,800.
5. On April 15 paid the amount due to D. Norlan Company in full.
Instructions
(a) Prepare the journal entries to record these transactions on the books of Martinez Co. using a
periodic inventory system.
(b) Assume that Martinez Co. paid the balance due to D. Norlan Company on May 4 instead of
April 15. Prepare the journal entry to record this payment.
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