At the beginning of the current season on April 1, the ledger of Kokott Pro Shop showed Cash...
Question:
At the beginning of the current season on April 1, the ledger of Kokott Pro Shop showed Cash $3,000; Inventory $5,000; and Common Stock $8,000.
These transactions occurred during April 2017:
| Apr. 5 | Purchased golf bags, clubs, and balls on account from Hogan Co. $1,700, FOB shipping point, terms 2/10, n/60 |
| 7 | Paid freight on Hogan Co. purchases $150 |
| 9 | Received credit from Hogan Co. for merchandise returned $150 |
| 10 | Sold merchandise on account to customers $780, terms n/30 |
| 12 | Purchased golf shoes, sweaters, and other accessories on account from Duffer Sportswear $450, terms 1/10, n/30 |
| 14 | Paid Hogan Co. in full |
| 17 | Received credit from Duffer Sportswear for merchandise returned $150 |
| 20 | Made sales on account to customers $780, terms n/30 |
| 21 | Paid Duffer Sportswear in full |
| 27 | Granted credit to customers for clothing that had flaws $40 |
| 30 | Received payments on account from customers $780 |
The chart of accounts for the pro shop includes Cash, Accounts Receivable, Inventory, Accounts Payable, Common Stock, Sales Revenue, Sales Returns and Allowances, Purchases, Purchase Returns and Allowances, Purchase Discounts, and Freight-In.
Required:
1. Journalize the April transactions using a periodic inventory system.
(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.
(Post entries in the order of journal entries in the #1.
3. Prepare a trial balance on April 30, 2017.
4. Prepare an income statement through gross profit, assuming merchandising inventory on hand at April 30 is $6,266.
Trial Balance:
Accounting equation requires that assets should always be equal to the sum of liabilities and equity. Also, in the trial balance, although accounts are broken down as to debits and credits balances, the totals of the two should always be equal.
Answer and Explanation: 1
1. Journalize the April transactions using a periodic inventory system.
| Date | Account | Debit | Credit |
| April 5 | Purchases | 1,700 | |
| Accounts Payable | 1,700 | ||
| To record the purchase of inventories. |
| Date | Account | Debit | Credit |
| April 7 | Freight in | 150 | |
| Cash | 150 | ||
| To record the payment of freight charges. |
| Date | Account | Debit | Credit |
| April 9 | Accounts Payable | 150 | |
| Purchase Returns and Allowances | 150 | ||
| To record the amount of inventory returned. |
| Date | Account | Debit | Credit |
| April 10 | Accounts Receivables | 780 | |
| Sales | 780 | ||
| To record the sale of inventory. |
| Date | Account | Debit | Credit |
| April 12 | Purchases | 450 | |
| Accounts Payable | 450 | ||
| To record the purchase of inventory. |
| Date | Account | Debit | Credit |
| April 14 | Accounts Payable | 1,550 | |
| Cash | 1,519 | ||
| Purchase Discount | 31 | ||
| To record the payment of payable. |
| Date | Account | Debit | Credit |
| April 17 | Accounts Payable | 150 | |
| Purchase Returns and Allowances | 150 | ||
| To record the return of inventory. |
| Date | Account | Debit | Credit |
| April 20 | Accounts Receivables | 780 | |
| Sales | 780 | ||
| To record the sale of inventories. |
| Date | Account | Debit | Credit |
| April 21 | Accounts Payable | 300 | |
| Cash | 297 | ||
| Purchase Discount | 3 | ||
| To record the payment of payable. |
| Date | Account | Debit | Credit |
| April 27 | Sales Returns and Allowance | 40 | |
| Accounts Receivables | 40 | ||
| To record the allowance given to customers. |
| Date | Account | Debit | Credit |
| April 30 | Cash | 740 | |
| Accounts Receivables | 740 | ||
| To record the collection of receivables. |
2. Using T-accounts, enter the beginning balances in the ledger accounts and post the April transactions.
| Account | Debit | Credit |
| Cash | 3,000 | |
| April 7 | 150 | |
| April 14 | 1,519 | |
| April 21 | 297 | |
| April 30 | 740 | |
| Balance | 1,774 |
| Account | Debit | Credit |
| Inventory | 5,000 | |
| Balance | 5,000 |
| Account | Debit | Credit |
| Common Stock | 8,000 | |
| Balance | 8,000 |
| Account | Debit | Credit |
| Purchases | 1,700 | |
| April 12 | 450 | |
| Balance | 2,150 |
| Account | Debit | Credit |
| Accounts Payable | 1,700 | |
| April 9 | 150 | |
| April 12 | 450 | |
| April 14 | 1,500 | |
| April 17 | 150 | |
| April 21 | 300 | |
| Balance | 0 |
| Account | Debit | Credit |
| Freight in | 150 | |
| Balance | 150 |
| Account | Debit | Credit |
| Purchase Returns and Allowances | 150 | |
| April 17 | 150 | |
| Balance | 300 |
| Account | Debit | Credit |
| Accounts Receivables | 780 | |
| April 20 | 780 | |
| April 27 | 40 | |
| April 30 | 740 | |
| Balance | 780 |
| Account | Debit | Credit |
| Sales | 780 | |
| April 20 | 780 | |
| Balance | 1,560 |
| Account | Debit | Credit |
| Purchase Discount | 31 | |
| April 21 | 3 | |
| Balance | 34 |
| Account | Debit | Credit |
| Sales Returns and Allowances | 40 | |
| Balance | 40 |
3. Prepare a trial balance on April 30, 2017.
Kokott Pro Shop
Trial Balance
As of April 30, 2017
| Account | Debit | Credit |
| Cash | 1,774 | |
| Inventory | 5,000 | |
| Common Stock | 8,000 | |
| Purchases | 2,150 | |
| Freight in | 150 | |
| Purchase Returns and Allowance | 300 | |
| Accounts Receivables | 780 | |
| Sales | 1,560 | |
| Purchase Discount | 34 | |
| Sales Returns and Allowances | 40 | |
| Total | 9,894 | 9,894 |
4. Prepare an income statement through gross profit, assuming merchandising inventory on hand at April 30 is $6,266.
| Beginning Inventory | 5,000 | |
| Purchases | 2,150 | |
| Freight in | 150 | |
| Purchase Discount | -34 | |
| Purchase Returns and Allowance | -300 | |
| Net Purchases | 1,966 | |
| Cost of Goods Available for Sale | 6,966 | |
| Ending Inventory | -6,266 | |
| Cost of Goods Sold | 700 |
Kokott Pro Shop
Income Statement
For the Month ended April 30, 2017
| Sales | 1,560 |
| Sales Returns and Allowance | -40 |
| Net Sales | 1,520 |
| Cost of Goods Sold | -700 |
| Gross Margin | 820 |
Learn more about this topic:
from
Chapter 3 / Lesson 10Discover the meaning of a journal entry and a trial balance, types of journal entries, how a general ledger differs from a trial balance, and some examples.