At the beginning of the current season on April 1, the ledger of Flint Hills Pro Shop showed :...

Question:

At the beginning of the current season on April 1, the ledger of Flint Hills Pro Shop showed :

Cash $2,610
Inventory $3,500
Common Stock $6,110.

The following transactions were completed during April 2014.

Apr. 5 Purchased golf bags, clubs, and balls on account from Akers Co. $2,400, terms 2/10, n/60.
7 Paid freight on Akers purchase $80.
9 Received credit from Akers Co. for merchandise returned $400.
10 Sold merchandise on account to members $1,450, terms n/30. The merchandise sold had a cost of $780.
12 Purchased golf shoes, sweaters, and other accessories on account from Palmer Sportswear $870, terms 2/10, n/30.
14 Paid Akers Co. in full.
17 Received credit from Palmer Sportswear for merchandise returned $70.
20 Made sales on account to members $980, terms n/30. The cost of the merchandise sold was $550.
21 Paid Palmer Sportswear in full.
27 Granted an allowance to members for clothing that did not fit properly $90.
30 Received payments on account from members $1,500.

1. Journalize the April transactions using a perpetual inventory system.

(Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

2. Using T-accounts, enter the beginning balances in the ledger accounts and post the April transactions.

3. Prepare a trial balance on April 30, 2014.

4. Prepare an income statement through gross profit for the month of April 2014.

T-Accounts:

T-Accounts, which are also called ledger accounts, show the debit and credit balances of all accounts. It displays the detailed increase or decrease in each account as a result of each accounting transaction. Just like the trial balance, the ending balance of each of the ledger accounts is also summarized and the net balance is reported. The said account will then be used in preparing the trial balance.

Answer and Explanation: 1

1. Journalize the April transactions using a perpetual inventory system.

(Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Date Account Debit Credit
April 5Inventory2,400
Accounts Payable 2,400
To record the purchase of golf bags, clubs and balls.


Date Account Debit Credit
April 7Inventory80
Cash 80
To record the payment of freight in.


Date Account Debit Credit
April 9Accounts Payable400
Inventory 400
To record the amount of merchandise returned.


Date Account Debit Credit
April 10Accounts Receivables1,450
Sales 1,450
To record the sale of merchandise on account.


Date Account Debit Credit
April 10Cost of Goods Sold780
Inventory 780
To record the cost of inventory sold.


Date Account Debit Credit
April 12Inventory870
Accounts Payable 870
To record the purchase of golf shoes, sweaters and other accessories.


Date Account Debit Credit
April 14Accounts Payable2,000
Cash1,960
Inventory 40
To record the payment to Akers Co.


Date Account Debit Credit
April 17Accounts Payable70
Inventory 70
To record the return of merchandise.


Date Account Debit Credit
April 20Accounts Receivables980
Sales 980
To record the sale of merchandise.


Date Account Debit Credit
April 20Cost of Goods Sold550
Inventory 550
To record the cost of inventory sold.


Date Account Debit Credit
April 21Accounts Payable800
Cash 784
Inventory 16


Date Account Debit Credit
April 27Sales Allowance90
Accounts Receivables 90
To record the sales allowance given to members.


Date Account Debit Credit
April 30Cash1,500
Accounts Receivables 1,500
To record the collection of receivables.


2. Using T-accounts, enter the beginning balances in the ledger accounts and post the April transactions.

AccountDebitCredit
Cash2,610
April 7 80
April 14 1,960
April 21 784
April 301,500
Balance1,286


AccountDebitCredit
Inventory3,500
April 52,400
April 780
April 9 400
April 10 780
April 12870
April 14 40
April 17 70
April 20 550
April 21 16
Balance4,994


AccountDebitCredit
Common Stock6,110
Balance 6,110


AccountDebitCredit
April 5-Accounts Payable 2,400
April 9400
April 10 870
April 14 2,000
April 1770
April 21800
Balance 0


AccountDebitCredit
April 10-Accounts Receivables1,450
April 20980
April 27 90
April 30 1,500
Balance840


AccountDebitCredit
April 10-Sales 1,450
April 20 980
Balance 2,430


AccountDebitCredit
April 10-Cost of Goods Sold780
April 20550
Balance1,330


AccountDebitCredit
April 27-Sales Allowance90
Balance90


3. Prepare a trial balance on April 30, 2014.

Flint Hills Pro Shop

Trial Balance

For the Month Ended April 30, 2014


AccountDebitCredit
Cash1,286
Accounts Receivables840
Inventory4,994
Common Stock 6,110
Sales 2,430
Cost of Goods Sold1,330
Sales Allowance90
Total8,5408,540


4. Prepare an income statement through gross profit for the month of April 2014.

Flint Hills Pro Shop

Income Statement

For the Month Ended April 30, 2014


Sales2,430
Sales Allowances-90
Net Sales2,340
Cost of Goods Sold-1,330
Gross Profit1,010

Learn more about this topic:

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Ledgers and Chart of Accounts: Definitions and Use

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Chapter 3 / Lesson 5
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