Accounting for Merchandising Operations

At the beginning of the current season on April, the ledger of Gage Pro Shop showed Cash $3,000. Inventory $4,000, and Owner's Capital $7,000. These transactions occurred during April 2019.
April 5Purchased golf bags, clubs, and balls on account from Tiger Co. $1,200, FOB shipping point, terms 2/10, n/60.
7Paid freight on Tiger Co. purchases $50.
9Received credit from Tiger Co. for merchandise returned $100.
10Sold merchandise on account to customers $600, terms n/30.
12Purchased golf shoes, sweaters, and other accessories on account from Classic sportswear $450, terms 1/10, n/30.
14Paid Tiger Co. in full.
17Received credit from Classic Sportswear for merchandise returned $50.
20Made sales on account to customers $600, terms n/30.
21Paid Classic Sportswear in full.
27Granted credit to customers for clothing that had flaws $35.
31Received payments on account from customers $600.

The chart of accounts for the pro shop includes Cash, Accounts Receivable, Inventory, Accounts Payable, Owner's Capital, Sales Revenue, Sales Returns and Allowances, Purchase Returns and Allowances, Purchase Discounts, and Freight In.


  1. Journalize the April transactions using a perpetual inventory system.
  2. Using T-accounts, enter the beginning balances in the ledger accounts and post the April transactions.
  3. Prepare a trial balance on April 30, 2019.
  4. Prepare an income statement through gross profit, assuming merchandise inventory on hand at April 30 is $4,824.


Gage Pro Shop
Journal Entries
(Perpetual Inventory System)
Gage Pro Shop
T Accounts
Gage Pro Shop
Trial Balance
April 30, 2019
Gage Pro Shop
Income Statement
For the Month Ended April 30, 2019
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