Problem 5-02A a-c (Part Level Submission) (Video) Cullumber Hardware Store compl

Question

Problem 5-02A a-c (Part Level Submission) (Video) Cullumber Hardware Store completed the following merchandising transactions in the month of May. At the beginning of May, the ledger of Cullumber showed Cash of $5,000 and Owner's Capital of $5,000 May 1 Purchased merchandise on account from Braun's Wholesale Supply $4,000, terms 2/10, n/30 2 Sold merchandise on account $1,900, terms 1/10, n/30. The cost of the merchandise sold was $1,000 5 Received credit from Braun's Wholesale Supply for merchandise returned $200 9 Received collections in full, less discounts, from customers billed on sales of $1,900 on May 2 10 Paid Braun's Wholesale Supply in full, less discount. 11 Purchased supplies for cash $400. 12 Purchased merchandise for cash $1,200 15 Received refund for poor quality merchandise from supplier on cash purchase $200 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 $3,300. The merchandise sold had a cost of $1,900 25 Purchased merchandise on account from Lumley, Inc. $650, FOB destination, terms 2/10, n/30 27 Paid Valley Distributors in full, less discount. 29 Made refunds to cash customers for defective merchandise $80. The returned merchandise had a fair value of $20 31 Sold merchandise on account $1,000, terms n/30. The cost of the merchandise sold was $600. Cullumber 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

Inventory a/c

To Accounts payable a/c

(Inventory purchased on credit)

$4,000

Accounts receivable a/c

To Sales a/c

(Sales made on account)

$1,900

Cost of goods Sold a/c

To Inventory a/c

(Being cost of sales recogised)

$1,000

Accounts payable a/c

To Inventory a/c

(Being Inventory purchased returned)

$200

Cash a/c

Sales discount a/c ($1900 x 1%)

To Account recivable a/c

(Being cash received and sales discount recognised)

$1710

$190

$1900

Accounts payable a/c

To Cash a/c

To Inventory a/c (4000 - 200) x 2%

(Being cash paid and discount on purcases recognised)

3800

$3724

$76

Supplies a/c

To cash

(Supplies purchased)

$400

Inventory a/c

To cash a/c

(Being merchandise purcased)

$1200

Cash a/c

To Inventory a/c

(Being purchases returns)

$200

Inventory a/c

Accounts payable a/c

(being inventory purchased on credit)

$1100

Inventory a/c

To cash a/c

(being frieght paid)

$110

Accounts receivable a/c

To Sales a/c

(Sales made on account)

$3300

Cost of goods Sold a/c

To Inventory a/c

(Being cost of sales recogised)

$1900

Inventory a/c

To Accounts payable a/c

(Inventory purchased on credit)

$650

Accounts payable a/c

To cash a/c

To Inventory a/c (1100 x 2%)

(Being cash paid and discount on purcases recognised)

$1100

$1078

$22

Sales returns and allowance a/c

To Cash a/c

(Being sales returned)

$80

Inventory a/c

To Sales returns and allowances a/c

(Being sales returned)

$20

Accounts receivable a/c

To Sales a/c

(being sales made on credit)

$1000

Cost of goods sold a/c

To Inventory a/c

(Being cost of sales recognised)

$600

Date Account title and description Debit Credit May 1

Inventory a/c

To Accounts payable a/c

(Inventory purchased on credit)

$4,000

$4,000 May 2

Accounts receivable a/c

To Sales a/c

(Sales made on account)

$1,900

$1,900 May 2

Cost of goods Sold a/c

To Inventory a/c

(Being cost of sales recogised)

$1,000

1,000 May 5

Accounts payable a/c

To Inventory a/c

(Being Inventory purchased returned)

$200

$200 May 9

Cash a/c

Sales discount a/c ($1900 x 1%)

To Account recivable a/c

(Being cash received and sales discount recognised)

$1710

$190

$1900

May 10

Accounts payable a/c

To Cash a/c

To Inventory a/c (4000 - 200) x 2%

(Being cash paid and discount on purcases recognised)

3800

$3724

$76

May 11

Supplies a/c

To cash

(Supplies purchased)

$400

$400 May 12

Inventory a/c

To cash a/c

(Being merchandise purcased)

$1200

$1200 May 15

Cash a/c

To Inventory a/c

(Being purchases returns)

$200

$200 May 17

Inventory a/c

Accounts payable a/c

(being inventory purchased on credit)

$1100

$1100 May19

Inventory a/c

To cash a/c

(being frieght paid)

$110

$110 May 24

Accounts receivable a/c

To Sales a/c

(Sales made on account)

$3300

$3300 May 24

Cost of goods Sold a/c

To Inventory a/c

(Being cost of sales recogised)

$1900

$1900 May 25

Inventory a/c

To Accounts payable a/c

(Inventory purchased on credit)

$650

$650 May 27

Accounts payable a/c

To cash a/c

To Inventory a/c (1100 x 2%)

(Being cash paid and discount on purcases recognised)

$1100

$1078

$22

May 29

Sales returns and allowance a/c

To Cash a/c

(Being sales returned)

$80

$80 May 29

Inventory a/c

To Sales returns and allowances a/c

(Being sales returned)

$20

$20 May 31

Accounts receivable a/c

To Sales a/c

(being sales made on credit)

$1000

$1000 May 31

Cost of goods sold a/c

To Inventory a/c

(Being cost of sales recognised)

$600

$600

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