Question

At the beginning of the current season on April 1, the ledger of Granite Hills Pro Shop showed Cash $ 3,360: inventory $ 3,500: and Common Stock $ 6,860. The following transactions were completed during April 2017.Apr. 5 Purchased golf bags, clubs, and balls on account from Arnie Co. $ 1,500, terms 3/10, n/60.7 Paid freight on Arnie purchase $ 80.9 Received credit from Arnie Co. for merchandise returned $700.10 Sold merchandise on account to members $1,420, terms n/30. The merchandise sold had a cost of $ 770.12 Purchased golf shoes, sweaters, and other accessories on account from Woods Sportswear $ 1,060, terms 2/10, n30.14 Paid Arnie Co. in full.17 Received a credit from Woods Sportswear for merchandise returned $60.20 Made sales on account to members $ 820, terms n/30. The cost of the merchandise sold was $550.21 Paid Woods Sportswear in full.27 Granted an allowance to members for clothing that did not fit properly $70.30 Received payments on account from members $1,370.1. Journalize the April transactions using a perpetual inventory system.2. Prepare an income statement through gross profit for the month of April 2017.

Answer 1

Journal Entries

Date Account Titles & Explanation Debit Credit

Apr 5 Purchases $1,500

Accounts Payable $1,500

Apr 7 Freight-in $80

Cash $80

Apr 9 Accounts Payable $700

Purchase Returns and Allowances $700

Apr 10 Accounts receivable $1,420

Sales $1,420

Apr 10 Cost of goods sold $770

Inventory $770

Apr 12 Purchases $1,060

Accounts Payable $1,060

Apr 14 Accounts Payable $800

($1500-$700 )

Purchase Discounts $24

($800 * 3%)

Cash $776

Apr 17 Accounts Payable $60

Purchase Returns and Allowances $60

Apr 20 Accounts receivable $820

Sales $820

(To record credit sales)

Apr 20 Cost of goods sold $550

Inventory $550

Apr 21 Accounts Payable (1060-60) $1,000

Purchase Discounts $20

($1000 * 2%)

Cash $980

Apr 27 Sales Returns and Allowances $70

Accounts Receivable $70

Apr 30 Cash $1,370

Accounts Receivable $1,370