)At the beginning of June, Chow Company has a balance in inventory of $2,100. Th

Question

)At the beginning of June, Chow Company has a balance in inventory of $2,100. The following transactions occur during the month of June. June 2 Purchase radios on account from Air One for $2,400, terms 3/15, n/45 June 4 Pay freight charges related to the June 2 purchase from Air One, $400. June 8 Return defective radios to Air One and receive credit, $600. June 10 Pay Air One in full. June 11 Sell radios to customers on account, $5,000, that had a cost of $3,300 June 18 Receive payment on account from customers, $3,100. June 20 Purchase radios on account from Motion Unlimited for $3,300, terms 3/10, n/30. June 23 Sell radios to customers for cash, $4,800, that had a cost of $3,200. June 26 Return damaged radios to Motion Unlimited and receive credit of $300. June 28 Pay Motion Unlimited in full. Required: 1. Assuming that Chow Company uses a perpetual inventory system, record the transactions. o page is attached) 2. Prepare the top section of the multiple-step income statement through gross profit for the month of June.

Explanation / Answer

Answer 1. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 2-Jun Inventory    2,400.00    Accounts Payable    2,400.00 (To record the purchase of Inventory) 4-Jun Inventory       400.00    Cash       400.00 (To record the Freight paid) 8-Jun Accounts Payable       600.00    Inventory       600.00 (To record the defective inventory return) 10-Jun Accounts Payable    1,800.00    Cash    1,746.00    Inventory ($1,800 X 3%)          54.00 (To record the amount paid) 11-Jun Accounts Receivable    5,000.00    Sales    5,000.00 (To record the sales) 11-Jun Cost of Goods Sold    3,300.00    Inventory    3,300.00 (To record the cost of goods sold) 18-Jun Cash    3,100.00    Accounts Receivable    3,100.00 (To record the cash received) 20-Jun Inventory    3,300.00    Accounts Payable    3,300.00 (To record the purchase of Inventory) 23-Jun Cash    4,800.00    Sales    4,800.00 (To record the sales) 23-Jun Cost of Goods Sold    3,200.00    Inventory    3,200.00 (To record the cost of goods sold) 26-Jun Accounts Payable       300.00    Inventory       300.00 (To record the defective inventory return) 28-Jun Accounts Payable    3,000.00    Cash    2,910.00    Inventory ($3,000 X 3%)          90.00 (To record the amount paid) Answer 2. Multiple-Step Income Statement (Partial) For the Month Ended June 31 Sales    9,800.00 Cost of Goods Sold Beginning Inventory    2,100.00 Purchases    5,700.00 Freight-in       400.00 Cost of Goods Purchased    8,200.00 Less: Purchase Return       900.00 Less: Purchase Discount       144.00 Cost of Goods Available for Sale    7,156.00 Less: Ending Inventory       656.00 Cost of Goods Sold    6,500.00 Gross Margin    3,300.00

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