CH6 Questions 14 -15 (of 17) The following information applies to the questions
ID: 2427480 • Letter: C
Question
CH6 Questions 14 -15 (of 17) The following information applies to the questions displayed below. At the beginning of July, CD City has a balance in Inventory of $2,600. The folowing transactions occur during the month of July July 3 Purchase CDs on account from Wholesale Music for $1,500, terms 110, n/30. ht charg es related to the July 3 purchase from Wholesale M usic, $110. July 9 Return incorrectly ordered CDs to Wholesale Music and receive credit, $200 July 11 Pay Wholesale Music in full July 12 Sell CDs to customers on account, $4,200, that had a cost of $2,200 July 15 Recelive full payment from customers related to the sale on July 12. July 18 Purchase CDs on account from Music Supply for $2,300, terms 1/10, n/30. July 22 Sell CDs to customers for cash, $3,400, that had a cost of $1,700. July 28 Return CDs to Music Supply and recelve credit of $140. July 30 Pay Music Supply in full value 10.00 pointsExplanation / Answer
Answer:1 Requirement 1:
3 July Purchases A/C Dr. $1500
To Accounts Payable A/C $1500
4 July Freight-In 110
To Cash $110
9 july Accounts Payable 200
To Purchase Returns 200
11 july Accounts Payable 1300
To Purchase Discounts 13
To Cash 1287
12 July Accounts Receivable 4,200
To Sales 4,200
15 July Cash 4,200
To Accounts Receivable 4,200
18 July Purchases 2300
To Accounts Payable 2300
22 July Cash 3,400
To Sales 3,400
July 28 Accounts Payable 140
To Purchase Returns 140
July 30 Accounts Payable 2160
To Cash 2138.4
To Purchase Discount 21.6
Answer: Requirement 2:
CD City Multiple-step Income Statement (partial) For the month of July Net sales: Total sales 7600 Less: sales return Net sales 7600 Cost of goods sold: Beg. Inventory 2600 Add: Purchases 3800 Freight-in 110 Less: Purchase Return 340 Purchase Discount 34.6 Cost of goods available for sale 6135.4 Less: Ending inventory 2160 Cost of goods sold: 3975.4 Gross Profit 3624.6