At the beginning of the current season, the ledger of Everett Tennis Shop showed Cash $2,500; Inventory $1,700; and Owner’s Capital $4,200. The following transactions were completed during April.
Apr. 4 Purchased racquets and balls from Riggs Co. $740, terms 3/10, n/30.
6 Paid freight on Riggs Co. purchase $60.
8 Sold merchandise to customers $900, terms n/30.
10 Received credit of $40 from Riggs Co. for a racquet that was returned.
11 Purchased tennis shoes from King Sports for cash $300.
13 Paid Riggs Co. in full.
14 Purchased tennis shirts and shorts from BJ Sportswear $700, terms 2/10, n/60.
15 Received cash refund of $50 from King Sports for damaged merchandise that was returned.
17 Paid freight on BJ Sportswear purchase $30.
18 Sold merchandise to customers $1,000, terms n/30.
20 Received $500 in cash from customers in settlement of their accounts.
21 Paid BJ Sportswear in full.
27 Granted an allowance of $25 to customers for tennis clothing that did not fit properly.
30 Received cash payments on account from customers $550.
The chart of accounts for the tennis shop includes Cash, Accounts Receivable, Inventory, Accounts Payable, Owner’s Capital, Sales Revenue, Sales Returns and Allowances, Purchases, Purchase Returns and Allowances, Purchase Discounts, and Freight-In.
(a) Journalize the April transactions using a periodic inventory system.
(b) Using T-accounts, enter the beginning balances in the ledger accounts and post the April transactions.
(c) Prepare a trial balance on April 30, 2014.
(d) Prepare an income statement through gross profit assuming inventory on hand at April 30 is $2,296.