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ID: 2540403 • Letter: U
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US Ghttps://www.chegg.com × ×..Gincome statement-Goo Secure l https://edugen.wileyplus.com/edugenstudentimainfruni LUS Kimmel, Accounting, e Problem 5-1A Winters Hardware Store completed the following merchandising transactions in the month of May. At the beginning of May, witers' ledger showed Cash May 1 Purchased merchandise on account from Black Wholesale Supply for $7,850, terms 1/10, n/30 2 Sold merchandise on account for $4,000, terms 2/10, n/30. The cost of the merchandise sold was $3,000. 5 Received credit from Black Wholesale Supply for merchandise returned $450. 9 Received collections in full, less discounts, from customers billed on May 2. 10 Paid Black Wholesale Supply in full less discount. 11 Purchased supplies for cash $900. 12 Purchased merchandise for cash $3,100 15 Received $230 refund for return of poor-quality merchandise from supplier on cash purchase 17 Purchased merchandise from Wihelm Distributors for $2,800, terms 2/10, n/3o 19 Paid freight on May 17 purchase $250. 24 Sold merchandise for cash $5,500. The cost of the merchandise sold was $4,100 25 Purchased merchandise from Clasps Inc. for $800, terms 3/10, n/30. 27 Paid Wilhelm Distributors in full, less discount 29 Made refunds to cash customers for returmed merchandise $150. The returned merchandise had cost $98. 31 Sold merchandise on account for $1,280, terms n/30. The cost of the merchandise sold was $830. eur nalize thensactions using a-petual inventory system, ("no entryls required sdar manually. Record journal entries in the order presented in the problem) No Entry" for the account titles and enter 0 for the a Date Account Titles and Explanation To record credit sale (To record cost of merchandse sold) May 9 Type here to searchExplanation / Answer
1.
Date
Account Titles and explanation
Debit
Credit
May 1
Inventory
7,850
Accounts payable
7,850
(to record credit purchase)
May 2
Accounts receivable
4,000
Sales revenue
4,000
(to record credit sales)
Cost of goods sold
3,000
Inventory
3,000
(to record cost of merchandise sold)
May 5
Accounts payable
450
Inventory
450
(to record purchased merchandise return)
May 9
Cash
3,920
Sales Discount
80
Accounts receivable
4,000
(to record payment received and sales discount)
Sales discount = 4,000 * 2% = $80
May 10
Accounts Payable
7,400
Cash
7,326
Inventory
74
(to record cash payment and Inventory)
Accounts Payable = (7,850 -450) = $7,400
Inventory= (7,850 – 450) *1% = $74
May 11
Supplies
900
Cash
900
(to record cash purchase of supplies)
May 12
Inventory
3,100
Cash
3,100
(to record cash purchase of Inventory)
May 15
Cash
230
Inventory
230
(to record cash received for return of Inventory)
May 17
Inventory
2,800
Accounts payable
2,800
(to record credit purchase of Inventory)
May 19
Inventory
250
Cash
250
(to record payment of freight charges)
May 24
Cash
5,500
Sales revenue
5,500
(to record cash sales)
Cost of goods sold
4,100
Inventory
4,100
(to record cost of merchandise sold)
May 25
Inventory
800
Accounts payable
800
(to record credit purchase of Inventory)
May 27
Accounts Payable
2,800
Cash
2,744
Inventory
56
(to record cash payment and Inventory)
Inventory= 2,800 *2% = $56
May 29
Sales returns and allowances
150
Cash
150
(to record payment of merchandise return)
Inventory
98
Cost of goods sold
98
(to record cost of goods sold return)
May 31
Accounts receivable
1,280
Sales revenue
1,280
(to record credit sales)
Cost of goods sold
830
Inventory
830
(to record cost of merchandise sold)
Note: Under perpetual inventory system all the discounts received and expenses related to purchases such freight, insurance etc. will directly charge to inventory account
Post the transactions in T-Accounts
Note: Beginning Balances was missing so used XXXX.
Cash
5/1 beg balance
XXXX
5/10
7,326
5/9
3,920
5/11
900
5/15
230
5/12
3,100
5/24
5,500
5/19
250
5/27
2,744
5/29
150
Balance
(W.N 2)
Accounts Receivable
5/1 beg balance
XXXXX
5/9
4,000
5/2
4,000
5/31
1,280
Balance
(W.N 2)
Inventory
5/1 beg balance
XXXX
5/2
4,000
5/1
7,850
5/5
450
5/12
3,100
5/10
74
5/17
2,800
5/15
230
5/19
250
5/24
4,100
5/25
800
5/27
56
5/29
98
5/31
830
Balance
(W.N 2)
Supplies
5/1 beg balance
XXXX
5/11
900
Balance
(W.N 2)
Accounts Payable
5/5
450
5/1 beg balance
XXXX
5/10
7,400
5/1
7,850
5/27
2,800
5/17
2,800
5/25
800
Balance
(W.N 2)
Common Stock
5/1 beg balance
XXXX
Balance
(W.N 2)
Sales revenue
5/2
4,000
5/24
5,500
5/31
1,280
Balance
10,780
Sales return and allowances
5/29
150
Sales discounts
5/9
80
Cost of goods sold
5/2
3,000
5/29
98
5/24
4,100
5/31
830
Balance
7,832
W.N 2 = Balance of assets and liabilities account is not possible due to opening balance is not available.
WINTERS HARDWARES STORE
Income Statement (Partial)
For the month of May ,2017
Sales revenue
Sales
10,780
Less:
Sales return and allowances
150
Sales discount
80
(230)
Net Sales
10,550
Cost of goods sold
(7,832)
Gross Profit
2,718
Profit Margin and Gross Profit Margin:
Profit margin: Net Profit/Net sales
Net Profit = (Gross Profit – Operating Expense)
= (2,718 – 1,400) = $1,318
Profit Margin = 1,318/10,550 = 12.49%
Gross Profit Margin = Gross profit/Net Sales
= 2,718/10,550 = 25.76%
Date
Account Titles and explanation
Debit
Credit
May 1
Inventory
7,850
Accounts payable
7,850
(to record credit purchase)
May 2
Accounts receivable
4,000
Sales revenue
4,000
(to record credit sales)
Cost of goods sold
3,000
Inventory
3,000
(to record cost of merchandise sold)
May 5
Accounts payable
450
Inventory
450
(to record purchased merchandise return)
May 9
Cash
3,920
Sales Discount
80
Accounts receivable
4,000
(to record payment received and sales discount)
Sales discount = 4,000 * 2% = $80
May 10
Accounts Payable
7,400
Cash
7,326
Inventory
74
(to record cash payment and Inventory)
Accounts Payable = (7,850 -450) = $7,400
Inventory= (7,850 – 450) *1% = $74
May 11
Supplies
900
Cash
900
(to record cash purchase of supplies)
May 12
Inventory
3,100
Cash
3,100
(to record cash purchase of Inventory)
May 15
Cash
230
Inventory
230
(to record cash received for return of Inventory)
May 17
Inventory
2,800
Accounts payable
2,800
(to record credit purchase of Inventory)
May 19
Inventory
250
Cash
250
(to record payment of freight charges)
May 24
Cash
5,500
Sales revenue
5,500
(to record cash sales)
Cost of goods sold
4,100
Inventory
4,100
(to record cost of merchandise sold)
May 25
Inventory
800
Accounts payable
800
(to record credit purchase of Inventory)
May 27
Accounts Payable
2,800
Cash
2,744
Inventory
56
(to record cash payment and Inventory)
Inventory= 2,800 *2% = $56
May 29
Sales returns and allowances
150
Cash
150
(to record payment of merchandise return)
Inventory
98
Cost of goods sold
98
(to record cost of goods sold return)
May 31
Accounts receivable
1,280
Sales revenue
1,280
(to record credit sales)
Cost of goods sold
830
Inventory
830
(to record cost of merchandise sold)
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