2-Journalize the transactions using a perpetual inventory system. (Credit accoun

Question

2-Journalize the transactions using a perpetual inventory system. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

3-Post the transactions to T-accounts. Be sure to enter the beginning cash and commo stock balances. (Post entries in the order of journal entries posted in part (a).)

4-Prepare an income statement through gross profit for the month of May 2014.

WATERS HARDWARE STORE
Income Statement (Partial)
For the Month Ended May 31, 2014

5-Calculate the profit margin and the gross profit rate. (Assume operating expenses were $1,447.) (Round answers to 0 decimal places, e.g. 15%.)

Profit margin % Gross profit rate % Problem 5-1A Waters Hardware Store completed the following merchandising transactions in the month of May. At the beginning of May, Water's ledger showed Cash of $8,268 and Common Stock of $8,268 May 1 Purchased merchandise on account from Hauke Wholesale Supply for $8,100, terms 1/10, n/30 2 Sold merchandise on account for $5,500, terms 2/10, n/30. The cost of the merchandise sold was $4,125 5 Received credit from Hauke Wholesale Supply for merchandise returned $500 9 Received collections in full, less discounts, from customers billed on May 2 10 Paid Hauke Wholesale Supply in full, less discount 11 Purchased supplies for cash $930 12 Purchased merchandise for cash $3,204 15 Received $238 refund for return of poor-quality merchandise from supplier on cash purchase 17 Purchased merchandise from Friedrich Distributors for $4,200, terms 2/10, n/30 19 Paid freight on May 17 purchase $258 24 Sold merchandise for cash $5,684. The cost of the merchandise sold was $4,237. 25 Purchased merchandise from Fasteners Inc. for $827, terms 3/10, n/30 27 Paid Friedrich Distributors in full, less discount 29 Made refunds to cash customers for returned merchandise $125. The returned merchandise had cost $94 31 Sold merchandise on account for $1,323, terms n/30. The cost of the merchandise sold was $858

Explanation / Answer

Ans 2 date Accounts Title Dr Cr 1-May Mercandise $8,100 Accounts payable $8,100 2-May Accounts Receivable 5500 Sales 5500 5-May Accounts payable 500 Mercandise Return 500 9-May Cash 5390 Discount 110 Accounts Receivable 5500 10-May Accounts payable 7600 Cash 7524 Discount received 76 11-May Supplies 930 Cash 930 12-May Mercandise 3204 Cash 3204 15-May Cash 238 Mercandise 238 17-May Mercandise 4200 Accounts payable 4200 24-May Cash 5684 Sale 5684 25-May Mercandise 827 Accounts payable 827 27-May Accounts payable 4200 Cash 4116 Discount received 84 29-May Sales return 125 Cash 125 31-May Accounts Receivable 1323 Sales 1323 Ans 4 Income Statement Revenue Sales (5500+5684+1323-125) 12382 Less: discount 110 Net sales 12272 Cost of good sold 8966 Gross Cost of good sold 9126 (4125+4237+858-94) Less: discount received 160 (76+84) Gross Profit 3306 Ans 5 Gross Profit % 3306/12272*100 26.94 In this case profit rate is also same as there is no other transaction mentioned

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