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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