Question: At the beginning of the current season on April 1, the ledger of Granite Hills Pro Shop showed Cash $2,500, Inventory $3,500, and Common Stock $6,000. The following transactions were completed during April 2017. Apr.
5 Purchased golf bags, clubs, and balls on account from Arnie Co. $1,500, terms 3/10, n/60.
7 Paid freight on Arnie purchase $80. 9 Received credit from Arnie Co. for merchandise returned $200. 10 Sold merchandise on account to members $1,340, terms n/30. The merchandise sold had a cost of $820.
12 Purchased golf shoes, sweaters, and other accessories on account from Woods Sportswear $830, terms 1/10, n/30.
14 Paid Arnie Co. in full.
17 Received credit from Woods Sportswear for merchandise returned $30.
20 Made sales on account to members $810, terms n/30. The cost of the merchandise sold was $550.
21 Paid Woods Sportswear in full.
27 Granted an allowance to members for clothing that did not fi t properly $80.
30 Received payments on account from members $1,220. The chart of accounts for the pro shop includes Cash, Accounts Receivable, Inventory, Accounts Payable, Common Stock, Sales Revenue, Sales Returns and Allowances, and Cost of Goods Sold.
Instructions: (a) Journalize the April transactions using a perpetual inventory system.
(b) Using T-accounts, enter the beginning balances in the ledger accounts and post the April transactions.
(c) Prepare a trial balance on April 30, 2017.
(d) Prepare an income statement through gross profit for the month of April 2017.