Background
Finn Music is a retail store specialising in musical instruments and consumables for rock and metal musicians. At the beginning of February 2017, the ledger of Finn Music showed Cash $2,500; Inventory $1,700; and Share Capital $4,200. The following transactions were completed during February:
Feb. 6 Purchased electric guitars from Guitars R Us Ltd $840, terms 3/7, n/30.
7 Paid freight on Guitars R Us Ltd purchase $40.
8 Sold inventory to customers $900, terms n/30. The inventory cost $600.
10 Received credit of $84 from Guitars R Us Ltd for a guitar that was returned.
11 Purchased guitar strings from Strings N Things for cash $300.
13 Paid Guitars R Us Ltd in full.
14 Purchased Guitar straps and leads from Musical Importers Ltd $500, terms 2/7, n/60.
15 Received cash refund of $50 from Strings N Things for damaged inventory that was returned.
17 Paid freight on Musical Importers Ltd purchase $30.
18 Sold inventory to customers $900, terms n/30. The cost of the inventory was $530.
20 Received $500 in cash from customers in settlement of their accounts.
21 Paid Strings N Things Ltd in full.
27 Granted an allowance of $30 to a customer for a guitar strap that was faulty.
28 Received cash payments on account from customers $500.
The chart of accounts for Finn Music includes Cash, Accounts Receivable, Inventory, Accounts Payable, Share Capital, Sales, Sales Returns and Allowances, and Cost of Sales.
(a) Using T-accounts, enter the beginning balances in the ledger accounts and post the February transactions.
(b) Prepare a trial balance on 28 February 2017.