Prepare an income statement through gross profit

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Reference no: EM131827077

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 occurred 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 Co. purchases $80.

9 Received credit from Arnie Co. for merchandise returned $200. 10 Sold merchandise on account to members $1,340, terms n/30.

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.

21 Paid Woods Sportswear in full.

27 Granted credit to members for clothing that did not fit 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, Purchases, Purchase Returns and Allowances, Purchase Discounts, and Freight-In. Instructions

(a) Journalize the April transactions using a periodic inventory system.

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

(d) Prepare an income statement through gross profit, assuming inventory on hand at April 30 is $4,263.

Reference no: EM131827077

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