At the beginning of the current season, the ledger of ...
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.
234 Chapter 5 Accounting for Merchandising Operations
(c) Total debits $6,160
Determine cost of goods sold
and gross profit under periodic
approach.
(SO 6, 7)
Gross profit $310,300
Calculate missing amounts and
assess profitability.
(SO 6, 7)
(a) 2007 $141,600
(c) 2007 Ending accts payable
$15,000
Journalize, post, and prepare
trial balance and partial income
statement using periodic
approach.
(SO 7, 8)
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
(a) General Journal
|Date | |Account Titles and Explanation | |Debit | |Credit |
|Apr. 4 | |Purchases | | 740 | | |
| | |Accounts Payable | | | |740 |
| | | | | | | |
| 6 | |Freight-in | | 60 | | |
| | |Cash | | | |60 |
| | | | | | | |
| 8 | |Accounts Receivable | | 900 | | |
| | |Sales | | | | 900 |
| | | | | | | |
| 10 | |Accounts Payable | | 40 | | |
| | |Purchase Returns and Allowances | | | |40 |
| | | | | | | |
| 11 | |Purchases | | 300 | | |
| | |Cash | | | |300 |
| | | | | | | |
| 13 | |Accounts Payable ($740 – $40) | | 700 | | |
| | |Purchase Discounts ($700 X 3%) | | | | 21 |
| | |Cash | | | |679 |
| | | | | | | |
| 14 | |Purchases | | 600 | | |
| | |Accounts Payable | | | |600 |
| | | | | | | |
| 15 | |Cash | | 50 | | |
| | |Purchase Returns and Allowances | | | | 50 |
| | | | | | | |
| 17 | |Freight-in | | 30 | | |
| | |Cash | | | |30 |
| | | | | | | |
| 18 | |Accounts Receivable | | 1,000 | | |
| | |Sales | | | |1,000 |
| | | | | | | |
| 20 | |Cash | | 500 | | |
| | |Accounts Receivable | | | | 500 |
| | | | | | | |
|21 | |Accounts Payable | | 600 | | |
| | |Purchase Discounts ($600 X 2%) | | | |12 |
| | |Cash | | | |588 |
|Date | |Account Titles and Explanation | |Debit | |Credit |
|Apr. 27 | |Sales Returns and Allowances | | 30 | | |
| | |Accounts Receivable | | | |30 |
| | | | | | | |
| 30 | |Cash | | 500 | | |
| | |Accounts Receivable | | | | 500 |
(b)
|Cash | |Accounts Payable |
|4/1 Bal. 2,500 |4/6 60 | |4/10 40 |4/4 740 |
|4/15 50 |4/11 300 | |4/13 700 |4/14 600 |
|4/20 500 |4/13 679 | |4/21 600 | |
|4/30 500 |4/17 30 | | | |
| |4/21 588 | | | |
| | | | |4/30 Bal. 0 |
| | | | | |
|4/30 Bal. 1,893 | | |Common Stock |
| | | |4/1 Bal. 4,200 |
|Accounts Receivable | | |4/30 Bal. 4,200 |
|4/8 900 |4/20 500 | | |
|4/18 1,000 |4/27 30 | | |
| |4/30 500 | | |
| | | |Sales |
| | | | |4/8 900 |
|4/30 Bal. 870 | | | |4/18 1,000 |
| | | |4/30 Bal. 1,900 |
|Merchandise Inventory | | |
|4/1 Bal. 1,700 | | |Purchase Discounts |
|4/30 Bal. 1,700 | | | |4/13 21 |
| | | | |4/21 12 |
|Sales Returns and Allowances | | |4/30 Bal. 33 |
|4/27 30 | | | |
|4/30 Bal. 30 | | |Freight-in |
| | | |4/6 60 | |
|Purchases | |4/17 30 | |
|4/4 740 | | |4/30 Bal. 90 | |
|4/11 300 | | | | |
|4/14 600 | | | | |
|4/30 Bal. 1,640 | | | | |
| | | | | |
|Purchase | |
|Returns and Allowances | |
| |4/10 40 | |
| |4/15 50 | |
| |4/30 Bal. 90 | |
(c) VILLAGE TENNIS SHOP
Trial Balance
April 30, 2008
| | |Debit | |Credit |
| Cash | |$1,893 | | |
|Accounts Receivable | | 870 | | |
|Merchandise Inventory | | 1,700 | | |
|Common Stock | | | |$4,200 |
|Sales | | | |1,900 |
|Sales Returns and Allowances | |30 | | |
|Purchases | |1,640 | | |
|Purchase Returns and Allowances | | | |90 |
|Purchase Discounts | | | |33 |
|Freight-in | |90 | | |
| | |$6,223 | |$6,223 |
VILLAGE TENNIS SHOP
Income Statement (Partial)
For the Month Ended April 30, 2008
Sales revenues
Sales $1,900
Less: Sales returns and
allowances 30
Net sales 1,870
Cost of goods sold
Inventory, April 1 $1,700
Purchases $1,640
Less: Purchase returns $90
and allowances
Purchase discounts 33 123
Net purchases 1,517
Add: Freight-in 90
Cost of goods purchased 1,607
Cost of goods available
for sale 3,307
Inventory, April 30 2,296
Cost of goods sold 1,011
Gross profit $ 859
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