Accounting for Merchandising Operations

Renner Hardware Store completed the following merchandising transactions in the month of May. At the beginning of May, the ledger of Renner showed Cash of $5,000 and Owner's Capital of $5,000.
May 1Purchased merchandise on account from Braun's Wholesale Supply $4,200, terms 2/10, n/30.
2Sold merchandise on account $2,100, terms 1/10, n/30. The cost of the merchandise sold was $1,300.
5Received credit from Braun's Wholesale Supply for merchandise returned $300.
9Received collections in full, less discounts, from customers billed on sales of $2,100 on May 2.
10Paid Braun's Wholesale Supply in full, less discount.
11Purchased supplies for cash $400
12Purchased merchandise for cash $1,400.
15received refund for poor quality merchandise from supplier on cash purchase $150.
17Purchased merchandise from Valley Distributors $1,300, FOB shipping point, terms 2/10, n/30.
19Paid freight on May 17 purchase $130
24Sold merchandise for cash $3,200. The merchandise sold had a cost of $2,000.
25Purchased merchandise from Lumley, Inc. $620, FOB destination, terms 2/10, n/30.
27Paid Valley Distributors in full, less discount.
29Made refunds to cash customers for defective merchandise $70. The returned merchandise had a fair value of $30.
31Sold merchandise on account $1,000 terms n/30. The cost of the merchandise sold was $560.

Runner Hardwere's chart of accounts includes the following: No. 101 Cash, No. 112 Accounts Receivable, No. 120 Inventory, No. 126 Supplies, No. 201 Accounts Payable, no. 301 Owner's Capital, No. 401 Salves, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, and No. 505 Cost of Goods Sold.

Instructions

  1. Journalize the transactions using a perpetual inventory system.
  2. Enter the beginning cash and capital balances and post the transactions. (use J1 for the journal reference.)
  3. Prepare an income statement through gross profit for the month of May 2019

Solution

a.
Renner Hardware Store
Journal Entries
(Perpetual Inventory System)
b.
Renner Hardware Store
(General Ledger)
c.
Renner Hardware Store
Income Statement (Partial)
For the Month Ended May 31, 2019
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