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During May, the last month of the fiscal year, the following transactions were completed: 1. Paid…

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Question “During May, the last month of the fiscal year, the following transactions were completed: 1. Paid…”

During May, the last month of the fiscal year, the following
transactions were completed:
1. Paid rent for May, $5,000.
3. Purchased merchandise on account from Martin Co., terms
2/10, n/30, FOB shipping
point, $36,000.
4. Paid freight on purchase of May 3, $600.
6. Sold merchandise on account to Korman Co., terms 2/10,
n/30, FOB shipping point,
$68,500. The cost of the goods sold was $41,000.
7. Received $22,300 cash from Halstad Co. on account.
10. Sold merchandise for cash, $54,000. The cost of the goods
sold was $32,000.
13. Paid for merchandise purchased on May 3.
15. Paid advertising expense for last half of May,
$11,000.
16. Received cash from sale of May 6.
19. Purchased merchandise for cash, $18,700.
19. Paid $33,450 to Buttons Co. on account.
20. Paid Korman Co. a cash refund of $13,230 for returned
merchandise from sale of
May 6. The invoice amount of the returned merchandise was
$13,500 and the
cost of the returned merchandise was $8,000.
20. Sold merchandise on account to Crescent Co., terms 1/10,
n/30, FOB shipping
point, $110,000. The cost of the goods sold was $70,000.
21. For the convenience of Crescent Co., paid freight on sale
of May 20, $2,300.
21. Received $42,900 cash from Gee Co. on account.
21. Purchased merchandise on account from Osterman Co., terms
1/10, n/30, FOB
destination, $88,000.
24. Returned damaged merchandise purchased on May 21,
receiving a credit memo
from the seller for $5,000.
26. Refunded cash on sales made for cash, $7,500. The cost of
the merchandise returned
was $4,800.
28. Paid sales salaries of $56,000 and office salaries of
$29,000.
29. Purchased store supplies for cash, $2,400.
30. Sold merchandise on account to Turner Co., terms 2/10,
n/30, FOB shipping point,
$78,750. The cost of the goods sold was $47,000.
30. Received cash from sale of May 20 plus freight paid on May
21.
31. Paid for purchase of May 21, less return of May 24.
Complete the following:
1. Prepare journal entries for all May transactions
2. Post journal entries to appropriate ledgers (t-charts) –
remember there are starting balances above!
3. Prepare an unadjusted trial balance.
4. Prepare (and post) the adjusting journal entries given the
following information:
a. Inventory on May 31 = $570,000
b. Insurance expired during the year = $12,000
c. Store supplies on hand on May 31 = $4,000
d. Depreciation for the current year = $14,000
e. Accrued salaries on May 31:
Sales salaries $7,000
Office salaries 6,600
13,600
f. The adjustment for customer returns and allowances is
$60,000 for sales and $35,000 for cost of goods sold.
5. Prepare an adjusted trial balance.
6. Prepare an Income Statement, Statement of Stockholder’s
Equity, and Balance
Sheet.
7. Prepare and post the closing journal entries.
8. Prepare a post-closing trial balance.

Answer

Answer to Question No. 1

Journal for all transactions for May

2

Fig In $
Date Particulars Dr. Amt Cr Amt
1st May Rent 5000
To Cash 5000
3rd May Purchases-Merchandise 36000
To Martin Co. 36000
4th May Freight Inward 600
To Cash 600
6th May Korman Co 68500
To Sales 68500
6th May Cost of Goods sold 41000
To Inventory 41000
7th May Cash 22300
To Halstad Co 22300
10thMay Cash 54000
To Sales 54000
10thMay Cost of Goods Sold 32000
to Inventory 32000
13th May Martin Co. 36000
To Cash 36000
16th May Cash 68500
To Korman Co 68500
19th May Purchases-Merchandise 18700
To Cash 18700
Purchased for cash
19th May Buttons Co. 33450
To Cash 33450
Paid on account
20th May Korman Co 13500
To cash 13230
To Gain on return 270
20th May Sales Return 13500
To Korman Co 13500
20th May Inventory 8000
To Cost of Goods sold 8000
Stock taken and cost reversed
20th May Crescent Co., 110000
To sales 110000
20th May Cost of Goods Sold 70000
to Inventory 70000
21st May Crescent Co., 2300
To Cash 2300
Freight on behalf paid
21st May Cash 42900
ToGee Co 42900
21st May Purchases-Merchandise 88000
To Osterman Co 88000
24thMay Osterman Co 5000
To Purchase return 5000
Goods returned
26th May Sales return 7500
To cash 7500
26th May Inventory 4800
To cost of goods sold 4800
28th May Salaries-Sales team 56000
Salaries-office team 29000
To Cash 85000
Salaries paid
29th May Stores 2400
To cash 2400
Purchased store supplies for cash, $2,400.
30th May Turner Co 78750
To sales 78750
30th May Cost of Goods Sold 47000
to Inventory 47000
Cost of
merchandise sold charged off
30th May Cash 112300
To Crescent Co., 112300
31st May Osterman Co 83000
To cash 83000

2) Ledgers for Personal accounts

Fig in $
Martin Co
Date Particulars Dr Amt Date Particulars Cr Amt
13th May To cash 36000 3rd May Purchases-Merchandise 36000
36000 36000
Fig in $
Korman Co
Date Particulars Dr Amt Date Particulars Cr Amt
6th May To sales 68500 16th May Purchases-Merchandise 68500
68500 68500
Fig in $
Halstad Co
Date Particulars Dr Amt Date Particulars Cr Amt
31st May Balanace C/f 22300 7th May Cash 22300
22300 22300
Balance b/F 22300
Fig in $
Buttons Co
Date Particulars Dr Amt Date Particulars Cr Amt
19th May To cash 33450 31st May Balanace C/f 33450
33450 33450
Balance b/F 33450
Fig in $
Crescent Co.,
Date Particulars Dr Amt Date Particulars Cr Amt
20thMay To Sales 110000 30th May Cash 112300
To Cash 2300
112300 112300
Fig in $
Osterman Co
Date Particulars Dr Amt Date Particulars Cr Amt
20thMay To Purchase return 5000 21s May Purchases-Merchandise 88000
31st May To Cash 83000
88000 88000
Fig in $
Turner Co
Date Particulars Dr Amt Date Particulars Cr Amt
30th May To Sales 78750 31st May Balance C/F 78750
78750 78750
Balance b/f 78750
Fig in $
Gee Co
Date Particulars Dr Amt Date Particulars Cr Amt
31stMay Balanace C/f 42900 21st May Cash 42900
42900 42900
Balance b/F 42900

Conclusion

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