Stein Hardware Store completed these merchandising transactions in the month of
ID: 2443764 • Letter: S
Question
Stein Hardware Store completed these merchandising transactions in the month of May. At the beginning of May, Stein's ledger showed Cash of $9,055 and Common Stock of $9,055.May 1 Purchased merchandise on account from Hilton Wholesale Supply $9,400, terms 2/10, n/30.
2 Sold merchandise on account $5,500, terms 3/10, n/30. The cost of the merchandise sold was $3,735.
5 Received credit from Hilton Wholesale Supply for merchandise returned $500.
9 Received collections in full, less discounts, from customers billed on on May 2.
10 Paid Hilton Wholesale Supply in full, less discount.
11 Purchased supplies for cash $1,019.
12 Purchased merchandise for cash $3,056.
15 Received $260 refund for return of poor-quality merchandise from supplier on cash purchase.
17 Purchased merchandise from Northern Distributors $3,200, terms 2/10, n/30.
19 Paid freight on May 17 purchase $283.
24 Sold merchandise for cash $6,112. The cost of the merchandise sold was $4,550.
25 Purchased merchandise from Toolware Inc. for $906, terms 3/10, n/30.
27 Paid Northern Distributors in full, less discount.
29 Made refunds to cash customers for returned merchandise $141. The returned merchandise had cost $102.
31 Sold merchandise on account $1,449, terms n/30. The cost of the merchandise sold was $939.
Journalize the transactions using a perpetual inventory system. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Date Account/Description Debit Credit
May 1 Sales DiscountsCashCommon StockSales Returns and AllowancesMerchandise InventorySalesCost of Goods SoldSuppliesAccounts ReceivableAccounts Payable
CashCost of Goods SoldSalesAccounts PayableMerchandise InventorySales Returns and AllowancesAccounts ReceivableSales DiscountsSuppliesCommon Stock
May 2 Merchandise InventorySales DiscountsAccounts ReceivableSuppliesAccounts PayableCost of Goods SoldSalesCommon StockSales Returns and AllowancesCash
Merchandise InventorySales Returns and AllowancesAccounts PayableCost of Goods SoldCommon StockSales DiscountsSuppliesSalesCashAccounts Receivable
(To record the sale.)
Sales DiscountsSuppliesMerchandise InventoryCashCommon StockSales Returns and AllowancesSalesCost of Goods SoldAccounts ReceivableAccounts Payable
SalesSales Returns and AllowancesSales DiscountsCost of Goods SoldSuppliesMerchandise InventoryCashAccounts ReceivableAccounts PayableCommon Stock
(To record the cost of inventory sold.)
May 5 Accounts ReceivableSales DiscountsSuppliesMerchandise InventoryAccounts PayableCost of Goods SoldCashCommon StockSalesSales Returns and Allowances
CashSuppliesMerchandise InventoryAccounts ReceivableAccounts PayableCommon StockSalesSales Returns and AllowancesSales DiscountsCost of Goods Sold
May 9 Accounts PayableSalesCommon StockSales Returns and AllowancesSales DiscountsCost of Goods SoldSuppliesCashAccounts ReceivableMerchandise Inventory
Sales Returns and AllowancesAccounts ReceivableCommon StockAccounts PayableSalesSuppliesCost of Goods SoldSales DiscountsMerchandise InventoryCash
SuppliesSales DiscountsAccounts ReceivableCost of Goods SoldAccounts PayableCashMerchandise InventoryCommon StockSalesSales Returns and Allowances
May 10 Merchandise InventoryCommon StockSales DiscountsSuppliesAccounts PayableCost of Goods SoldCashSalesAccounts ReceivableSales Returns and Allowances
Sales Returns and AllowancesAccounts ReceivableCost of Goods SoldMerchandise InventorySales DiscountsAccounts PayableCommon StockSalesSuppliesCash
Sales DiscountsAccounts PayableCommon StockAccounts ReceivableMerchandise InventorySalesCashSales Returns and AllowancesCost of Goods SoldSupplies
May 11 CashSuppliesSales Returns and AllowancesSales DiscountsCost of Goods SoldAccounts ReceivableMerchandise InventoryAccounts PayableCommon StockSales
Cost of Goods SoldCashSales Returns and AllowancesSales DiscountsSuppliesAccounts ReceivableAccounts PayableMerchandise InventoryCommon StockSales
May 12 Sales Returns and AllowancesAccounts PayableSalesMerchandise InventoryCashAccounts ReceivableSales DiscountsCost of Goods SoldCommon StockSupplies
Sales DiscountsAccounts PayableMerchandise InventoryCost of Goods SoldSuppliesCommon StockCashSalesSales Returns and AllowancesAccounts Receivable
May 15 CashMerchandise InventoryCommon StockSales Returns and AllowancesAccounts ReceivableCost of Goods SoldAccounts PayableSalesSales DiscountsSupplies
Common StockSalesAccounts PayableSales Returns and AllowancesSales DiscountsCost of Goods SoldSuppliesMerchandise InventoryCashAccounts Receivable
May 17 Merchandise InventorySalesSales DiscountsAccounts PayableCashCost of Goods SoldSales Returns and AllowancesSuppliesCommon StockAccounts Receivable
Merchandise InventoryCost of Goods SoldAccounts PayableCashSalesCommon StockAccounts ReceivableSales Returns and AllowancesSales DiscountsSupplies
May 19 CashAccounts PayableCommon StockSales Returns and AllowancesSuppliesSales DiscountsAccounts ReceivableCost of Goods SoldSalesMerchandise Inventory
Accounts PayableSalesSales DiscountsCashCost of Goods SoldSuppliesSales Returns and AllowancesMerchandise InventoryAccounts ReceivableCommon Stock
May 24 Merchandise InventoryAccounts ReceivableAccounts PayableCommon StockSales DiscountsSalesSales Returns and AllowancesCost of Goods SoldSuppliesCash
CashSales Returns and AllowancesAccounts ReceivableCommon StockMerchandise InventorySales DiscountsAccounts PayableCost of Goods SoldSuppliesSales
(To record the sale.)
Sales Returns and AllowancesCost of Goods SoldSuppliesCommon StockCashSales DiscountsAccounts ReceivableSalesAccounts PayableMerchandise Inventory
SuppliesSales Returns and AllowancesSales DiscountsAccounts PayableCommon StockAccounts ReceivableCost of Goods SoldSalesMerchandise InventoryCash
(To record the cost of inventory.)
May 25 Accounts ReceivableMerchandise InventoryAccounts PayableCashSalesCommon StockSales Returns and AllowancesSales DiscountsCost of Goods SoldSupplies
Common StockSales DiscountsCost of Goods SoldSuppliesSalesSales Returns and AllowancesAccounts PayableMerchandise InventoryCashAccounts Receivable
May 27 Sales Returns and AllowancesMerchandise InventorySalesCashSales DiscountsAccounts PayableCost of Goods SoldAccounts ReceivableCommon StockSupplies
Merchandise InventorySales Returns and AllowancesAccounts ReceivableSales DiscountsSalesCommon StockCost of Goods SoldAccounts PayableSuppliesCash
Accounts ReceivableAccounts PayableCommon StockSales DiscountsSalesSales Returns and AllowancesCost of Goods SoldSuppliesCashMerchandise Inventory
May 29 CashAccounts PayableSuppliesAccounts ReceivableSalesCommon StockSales DiscountsCost of Goods SoldSales Returns and AllowancesMerchandise Inventory
SuppliesCashMerchandise InventoryAccounts ReceivableAccounts PayableCommon StockSalesSales Returns and AllowancesSales DiscountsCost of Goods Sold
(To record refund of cash.)
SuppliesAccounts PayableSalesSales Returns and AllowancesSales DiscountsCost of Goods SoldCommon StockAccounts ReceivableMerchandise InventoryCash
Cost of Goods SoldAccounts PayableCommon StockSales Returns and AllowancesSalesSales DiscountsAccounts ReceivableSuppliesMerchandise InventoryCash
(To record return of inventory.)
May 31 Cost of Goods SoldSuppliesCashMerchandise InventoryAccounts ReceivableCommon StockAccounts PayableSalesSales Returns and AllowancesSales Discounts
SalesSales DiscountsCost of Goods SoldSuppliesMerchandise InventoryCashAccounts ReceivableCommon StockAccounts PayableSales Returns and Allowances
(To record the sale.)
Sales DiscountsAccounts ReceivableSuppliesCost of Goods SoldSales Returns and AllowancesCommon StockMerchandise InventoryCashSalesAccounts Payable
SuppliesSales DiscountsCost of Goods SoldMerchandise InventorySales Returns and AllowancesCommon StockCashSalesAccounts ReceivableAccounts Payable
(To record the cost of inventory.)
Post the transactions to T accounts. Be sure to enter the beginning cash and common stock balances. Then complete the income statement through gross profit for the month of May 2010 below. (For multiple accounts, list from largest to smallest amounts, e.g. 10, 5, 2.)
STEIN HARDWARE STORE
Income Statement (Partial)
May 31, 2010For the month ended May 31, 2010
Sales revenues
Cost of Goods SoldSuppliesCashAccounts receivableSalesMerchandise inventorySales returns and allowancesSales discounts $
Less: SalesMerchandise inventoryAccounts PayableSales discountsSales returns and allowancesSuppliesCost of Goods Sold $
Sales discountsSalesCost of Goods SoldSales returns and allowancesSuppliesMerchandise inventoryAccounts Payable
Net Sales
SuppliesSales discountsSalesAccounts payableCashMerchandise inventoryCost of Goods SoldSales returns and allowances
Gross profit $
Calculate the profit margin ratio and the gross profit rate. (Assume operating expenses were $1,585.) (Round answer to 2 decimal places, e.g. 0.25.)
Profit margin ratio
Gross profit rate
Explanation / Answer
May.01 Merchandise Inventory $9,400
Accounts payable $9,400
(Purchased Merchandise Inventory on account)
May.02 Accounts receivable $5,500
Sales $5,500
(Sales of merchandise on account)
May.02 Cost of goods sold $3,735
Merchandise inventory $3,735
(Adjustment of cost of goods sold)
May.05 Accounts payable $500
Merchandise Inventory $500
(Received credit for merchandise returned)
May .09 Cash $5,335
Sales return & allowance (5500*3%) $165
Accounts receivable $5,500
(Received collections for sale of April 04 less discount)
May.10 Accounts payable(9400-500) $8900
Cash $8,633
Merchandise Inventory(8900*3%) $267
(Paid for Merchandise purchased on May.01 less discounts)
May.11 Supply $1,019
Cash $1,019
(Purchased supply for cash)
May.12 Merchandise inventory $3,056
Cash $3,056
(Purchased merchandise for cash)
May.15 Cash $260
Merchandise Inventory $260
(Returned of merchandise and cash received back)
May.17 Merchandise Inventory $3,200
Accounts payable $3,200
(Purchased Merchandise on account)
May.19 Merchandise Inventory $283
Cash $283
(Paid Freight on merchandise purchased on May.17)
May.24 Cash $6,112
Sales $6,112
(Sale of Merchandise for cash)
May.24 Cost of goods sold $4,550
Merchandise Inventory $4,550
(Adjustment of Cost of goods sold)
May.25 Merchandise Inventory $906
Accounts payable $906
(Purchased Merchandise on account)
May.10 Accounts payable(3200-283) $2917
Cash $2,858.66
Merchandise Inventory(2917*2%) $58.34
(Paid for Merchandise purchased on May.01 less discounts)
May 29 Sales return & discount $141
Cash $141
(Make refunds for merchandise returned)
May 29 Merchandise inventory $102
Cost of goods sold $102
(Cost of goods sold on inventory retuned – adjusted)
May 31 Accounts receivable $1,449
Sales $1,449
(Sold Merchandise on account)
May 31 Cost of goods sold $939
Merchandise Inventory $939
(Adjustment of Cost of goods sold)
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