Question 1 (a) Date Account Titles and Explanation Debit Credit (To record credi

Question

Question 1

(a)

Date

Account Titles and Explanation

Debit

Credit

(To record credit sale)

(To record cost of merchandise sold)

May 9

(To record cash sale)

(To record cost of merchandise sold)

(To record merchandise returned)

(To record cost of merchandise returned)

(To record credit sale)

(To record cost of merchandise sold)

Question 1

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 $5,070 and Owner’s Capital of $5,070.
May 1 Purchased merchandise on account from Braun's Wholesale Supply $3,900, terms 1/10, n/30. 2 Sold merchandise on account $2,100, terms 2/10, n/30. The cost of the merchandise sold was $1,130. 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 $2,100 on May 2. 10 Paid Braun's Wholesale Supply in full, less discount. 11 Purchased supplies for cash $380. 12 Purchased merchandise for cash $1,500. 15 Received refund for poor quality merchandise from supplier on cash purchase $110. 17 Purchased merchandise from Valley Distributors $1,300, FOB shipping point, terms 2/10, n/30. 19 Paid freight on May 17 purchase $120. 24 Sold merchandise for cash $3,440. The merchandise sold had a cost of $2,080. 25 Purchased merchandise from Lumley, Inc. $700, FOB destination, terms 2/10, n/30. 27 Paid Valley Distributors in full, less discount. 29 Made refunds to cash customers for defective merchandise $60. The returned merchandise had a fair value of $20. 31 Sold merchandise on account $1,070, terms n/30. The cost of the merchandise sold was $590.

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

May DR CR 1 Merchandise inventory 3900 Accounts payable 3900 Purchased merchandise on account from Braun's Wholesale Supply 2 Accounts receivable 2100 Sales 2100 Sold merchandise on account 2 Cost of goods sold 1130 Merchandise inventory 1130 The cost of the merchandise sold was $1,130 5 Account Payable 300 Merchandise inventory 300 Received credit from Braun's Wholesale Supply for merchandise returned 9 Cash 2058 sales Disocunt 42 Accounts receivable 2100 Received collections in full, less discounts, from customers billed on sales of $2,100 on May 2. 10 Accounts payable 3600 Cash 3564 Merchandise inventory 36 Paid Braun's Wholesale Supply in full, less discount. 11 Supplies 380 Cash 380 Purchased supplies for cash $380. 12 Merchandise inventory 1500 Cash 1500 Purchased merchandise for cash $1,500. 15 Cash 110 Merchandise inventory 110 Received refund for poor quality merchandise from supplier on cash purchase $110. 17 Merchandise inventory 1300 Accounts payable 1300 Purchased merchandise from Valley Distributors $1,300, FOB shipping point, terms 2/10, n/30. 19 Merchandise inventory 120 Cash 120 Paid freight on May 17 purchase $120. 24 Cash 3440 Sales 3440 Sold merchandise for cash $3,440. 24 Cost of goods sold 2080 Merchandise inventory 2080 merchandise sold had a cost of $2,080. 27 Merchandise inventory 700 Accounts payable 700 Purchased merchandise from Lumley, Inc 27 Accounts payable 1300 Cash 1274 Merchandise inventory 26 Paid Valley Distributors in full, less discount. 29 Sales returns and allowances 60 Cash 60 Made refunds to cash customers for defective merchandise $60 29 Merchandise inventory 20 Cost of goods sold 20 The returned merchandise had a fair value of $20. 31 Cash 1070 Sales 1070 Sold merchandise on account $1,070, 31 Cost of goods sold 590 Merchandise inventory 590 he cost of the merchandise sold was $590.

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