Problem 5-2A Journalize the transactions using a perpetual inventory system. (Cr

Question

Problem 5-2A

Journalize the transactions using a perpetual inventory system. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

2 ////// Enter the beginning cash and capital balances and post the transactions. (Post entries in the order of journal entries presented in the previous question.)

3////// Prepare an income statement through gross profit for the month of May 2017.

Problem 5-2A

Renner Hardware Store completed the following merchandising transactions in the month of May. At the beginning of May, the ledger of Renner showed Cash of $5,500 and Owner’s Capital of $5,500. May 1 Purchased merchandise on account from Braun's Wholesale Supply $3,900, terms 2/10, n/30. 2 Sold merchandise on account $2,300, terms 2/10, n/30. The cost of the merchandise sold was $1,290. 5 Received credit from Braun's Wholesale Supply for merchandise returned $300. 9 Received collections in full, less discounts, from customers billed on sales of $2,300 on May 2. 10 Paid Braun's Wholesale Supply in full, less discount. 11 Purchased supplies for cash $310. 12 Purchased merchandise for cash $1,300. 15 Received refund for poor quality merchandise from supplier on cash purchase $170. 17 Purchased merchandise from Valley Distributors $1,100, FOB shipping point, terms 2/10, n/30. 19 Paid freight on May 17 purchase $110. 24 Sold merchandise for cash $3,000. The merchandise sold had a cost of $2,090. 25 Purchased merchandise from Lumley, Inc. $710, FOB destination, terms 2/10, n/30. 27 Paid Valley Distributors in full, less discount. 29 Made refunds to cash customers for defective merchandise $70. The returned merchandise had a fair value of $40. 31 Sold merchandise on account $1,170, terms n/30. The cost of the merchandise sold was $580.

Renner Hardware’s chart of accounts includes the following: No. 101 Cash, No. 112 Accounts Receivable, No. 120 Inventory, No. 126 Supplies, No. 201 Accounts Payable, No. 301 Owner’s Capital, No. 401 Sales Revenue, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, and No. 505 Cost of Goods Sold.

Explanation / Answer

Renner's Hardware Stores General journal for the month of May Date Account Title Debit Credit May.1 Inventory 3900 Accounts Payable 3900 (Purchase of merchandise from Braun's) May.2 Accounts Receivable 2300 Sales 2300 (Sale of merchandise on account) Cost of goods sold 1290 Inventory 1290 (Cost of the goods sold) May.5 Accounts Payable 300 Inventory 300 (Credit received from Braun's) May.9 Cash 2254 Sales Discount 46 Accounts Receivable 2300 (Payment received for May.2 sale) May.10 Accounts Payable 3600 Cash 3528 Inventory 72 (Payment made to Braun's) May.11 Supplies 110 Cash 110 (Purchase of supplies for cash) May.12 Inventory 1300 Cash 1300 (Purchase of merchandise for cash) May.15 Cash 170 Inventory 170 (Refundreceived for poor quality merchandise) May.17 Inventory 1100 Accounts Payable 1100 (Purchase of merchandise on account from Valley) May.19 Inventory 110 Cash 110 (Freight paid on May.17 purchase) May.24 Cash 3000 Sales 3000 (Sale of merchandise for cash) Cost of goods sold 2090 Inventory 2090 (Cost of goods sold for cash) May.25 Inventory 710 Accounts Payable 710 (Purchase of merchandise on account from Lumley) May.27 Accounts Payable 1100 Inventory 22 Cash 1078 (Payment made to Valley) May.29 Sales Returns and allowances 70 Cash 70 (Cash refund made for defective merchandise) Inventory 40 Cost of goods sold 40 (Cost of the defective goods returned) May.31 Accounts Receivable 1170 Sales 1170 (Sale of merchandise on account) Cost of goods sold 580 Inventory 580 (Cost of the goods sold) Cash Accounts Receivable Inventory Date Debit Date Credit Date Debit Date Credit Date Debit Date Credit Beg.Bal. 5500 May.10 3528 May.2 2300 May.9 2300 May.1 3900 May.2 1290 May.9 2254 May.11 110 May.31 1170 May.12 1300 May.5 300 May.15 170 May.12 1300 3470 2300 May.17 1100 May.10 72 May.24 3000 May.19 110 End Bal. 1170 May.19 110 May.15 170 May.27 1078 May.29 40 May.24 2090 May.29 70 Sales May.27 22 10924 6196 Date Debit Date Credit May.31 580 End Bal. 4728 May.2 2300 6450 4524 May.24 3000 End Bal. 1926 May.31 1170 Owners' Cpital 0 6470 Cost of goods sold Date Debit Date Credit End Bal. 6470 Date Debit Date Credit Beg.Bal. 5500 May.2 1290 May.29 40 0 5500 May.24 2090 End.Bal. 5500 May.31 580 Accounts Payable 3960 40 Sales Returns and allowances Date Debit Date Credit End Bal. 3920 Date Debit Date Credit May.5 300 May.1 3900 May.29 70 May.10 3600 May.17 1100 Sales Discount May.27 1100 Date Debit Date Credit 70 0 5000 5000 May.9 46 End.Bal. 70 46 0 End.Bal. 46 Renners; Hardware Income Statement (Partial) for the maonth ended May 31 Sales Revenue 6470 Less:         Sales returns and allowances 70          Sales Discounts 46 116 Net Sales 6354 Less: Cost of goods sold 3920 Gross profit 2434

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