Renner Hardware Store completed the following merchandising transactions in the
ID: 2469174 • Letter: R
Question
Renner Hardware Store completed the following merchandising transactions in the mont of May. At the beginning of May, the ledger of Renner showed Cash of $5,000 and Owner's Capital of $5,000. May 1 Purchased merchandise on account from Braun's Wholesale Supply $4,200, terms 2/10, n/30. 2 Sold merchandise on account $2,100, term 1/10, n/30. The cost of the merchandise sold was $1,300. 5 Received credit from Bnun's Wholesale Supply for merchandise returned $300. 9 Received collections in full, less discounts, from customers billed on sales of $2,100 on May 2. 10 Paid Braun's Wholesale Supply in full, less discount. 11 Purchased supplies for cash $400. 12 Purchased merchandise for cash $1,400. 15 Received refund for poor quality merchandise from supplier on cash purchase $150. 17 Purchased merchandise from Valley Distributors $1,300, FOB shipping point, terms 2/10. n/30. 19 Paid freight on May 17 purchase $130. 24 Sold merchandise for cash $3,200. The merchandise sold had a cost of $2,000. 25 Purchased merchandise from Lumky, Inc. $620. FOB destination, terms 2/10, n/30. 27 Paid Valley Distributors in full, less discount. 29 Made refunds to cash customers for defective merchandise $70. The returned merchandise had a fair value of $30. 31 Sold merchandise on account $1,000 terms n/30. The cost of the merchandise sold was $560. Renner Hardware's chart of accounts includes the following: No. 1001 Cash, No. 112 Accounts Receivable, No. 120 Inventory, No. 126 Supplies, No. 201 Accounts Payable, No. 301 Owner's Capital, No. 401 Sales Revenue, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, and No. 505 Cost of Goods Sold. Instructions (a) Journalizse the transactions using a perpctual inventory system. (b) Enter the beginning cash and capital balances and post the transactions. (Use JI for the journal reference.) (c) Prepare an income statement through gross profit for the month of May 2017.Explanation / Answer
Renner Hardware Store All Amounts in $ Ref.No. Date Particulars Debit Credit J1 01-May Merchandise A/c 4200 To Accounts Payable A/c 4200 J2 02-May Accounts Receivable A/c 2100 To Merchandise A/c 2100 02-May Merchandise A/c 1300 To Inventory A/c 1300 J3 05-May Accounts Payable A/c 300 To Merchandise Return A/c 300 J4 09-May Cash A/c 2079 Discounts A/c 21 To Accounts Receivable A/c 2100 J5 10-May Accounts Payable A/c 3900 To Cash A/c 3822 To Discounts A/c 78 J6 11-May Supplies A/c 400 To Cash A/c 400 J7 12-May Merchandise A/c 1400 To Cash A/c 1400 J8 15-May Cash A/c 150 To Merchandise Return A/c 150 J9 17-May Merchandise A/c 1300 To Accounts Payable A/c 1300 J10 19-May Freight A/c 130 To Cash A/c 130 J11 24-May Cash A/c 3200 To Merchandise A/c 3200 Merchandise A/c 2000 To Inventory A/c 2000 J12 25-May Merchandise A/c 620 To Accounts Payable A/c 620 J13 27-May Accounts Payable A/c 1300 To Cash A/c 1274 To Discounts A/c 26 J14 29-May Merchandise Return A/c 70 To Cash A/c 70 Inventory A/c 30 To Merchandise Return A/c 30 J15 31-May Accounts Receivable A/c 1000 To Merchandise A/c 1000 Merchandise A/c 560 To Inventory A/c 560 Cash A/c Owners Capital A/c J1 4200 By balance b/fd 5000 J5 3822 J2 1300 J2 2100 J6 400 J4 21 J3 300 J7 1400 J9 1300 J5 78 J10 130 J10 130 J11 3200 J13 1274 J11 2000 J13 26 J14 70 J12 620 J14 30 J14 70 J15 1000 J15 560 5230 3300 1930