At the beginning of the current season on April, the ledger of Gage Pro Shop showed Cash $3,000. Inventory $4,000, and Owner's Capital $7,000. These transactions occurred during April 2019.
| April 5 | Purchased golf bags, clubs, and balls on account from Tiger Co. $1,200, FOB shipping point, terms 2/10, n/60. |
| 7 | Paid freight on Tiger Co. purchases $50. |
| 9 | Received credit from Tiger Co. for merchandise returned $100. |
| 10 | Sold merchandise on account to customers $600, terms n/30. |
| 12 | Purchased golf shoes, sweaters, and other accessories on account from Classic sportswear $450, terms 1/10, n/30. |
| 14 | Paid Tiger Co. in full. |
| 17 | Received credit from Classic Sportswear for merchandise returned $50. |
| 20 | Made sales on account to customers $600, terms n/30. |
| 21 | Paid Classic Sportswear in full. |
| 27 | Granted credit to customers for clothing that had flaws $35. |
| 31 | Received payments on account from customers $600. |
The chart of accounts for the pro shop includes Cash, Accounts Receivable, Inventory, Accounts Payable, Owner's Capital, Sales Revenue, Sales Returns and Allowances, Purchase Returns and Allowances, Purchase Discounts, and Freight In.
Instructions
- Journalize the April transactions using a perpetual inventory system.
- Using T-accounts, enter the beginning balances in the ledger accounts and post the April transactions.
- Prepare a trial balance on April 30, 2019.
- Prepare an income statement through gross profit, assuming merchandise inventory on hand at April 30 is $4,824.
Solution
a.
Gage Pro Shop
Journal Entries
(Perpetual Inventory System)
Journal Entries
(Perpetual Inventory System)
b.
Gage Pro Shop
T Accounts
T Accounts
c.
Gage Pro Shop
Trial Balance
April 30, 2019
Trial Balance
April 30, 2019
d.
Gage Pro Shop
Income Statement
For the Month Ended April 30, 2019
Income Statement
For the Month Ended April 30, 2019
