Question: Eagle Hardware Store Ltd. completed the following merchandising transactions in the month of May 2015. At the beginning of May, Eagle's ledger showed Cash $7,000;
Eagle Hardware Store Ltd. completed the following merchandising transactions in the month of May 2015. At the beginning of May, Eagle's ledger showed Cash $7,000; Accounts Receivable $1,500; Merchandise Inventory $3,500; Common Shares $8,000; and Retained Earnings $4,000. Eagle Hardware uses a perpetual inventory system.
May 1 Purchased merchandise on account from Depot Wholesale Supply Ltd. for $5,800, terms 1/10, n/30, FOB shipping point.
3 Freight charges of $145 were paid by the appropriate party on the merchandise purchased on May 1.
4 Sold merchandise on account to Shep Ltd. for $3,500, terms 2/10, n/30, FOB destination. The cost of the merchandise was $2,100.
7 Freight charges of $90 were paid by the appropriate party on the May 4 sale.
8 Received a $200 credit from Depot Wholesale Supply when merchandise was returned.
9 Paid Depot Wholesale Supply in full.
11 Purchased supplies for $400 cash.
14 Received payment in full from Shep Ltd. for merchandise sold on account on May 4.
15 Collected $1,000 of the accounts receivable outstanding at the beginning of the month. All accounts were originally sold on terms of n/30, with no sales discounts.
18 Purchased merchandise from Harlow Distributors Inc. for $2,000, terms n/30, FOB destination.
21 Freight of $50 was paid by the appropriate party on the May 18 purchase of merchandise.
22 Sold merchandise to various customers for $6,500 cash. The cost of the merchandise was $3,900.
29 Paid a $100 cash refund to customers for returned merchandise. The cost of the returned merchandise was $60. It was restored to inventory.
31 A physical inventory count was taken and determined that there was $5,100 of inventory on hand.
Prepare any adjustment required.
Instructions
(a) Prepare T accounts and enter the opening balances.
(b) Record and post the May transactions for Eagle Hardware Store.
(c) Prepare a partial multiple-step income statement for the month ended May 31, through to gross profit.
(d) Prepare the current assets section of the statement of financial position as at May 31.
Step by Step Solution
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b May 1 Merchandise Inventory Accounts Payable 5800 5800 3 Merchandise Inventory Cash 145 145 4 Accounts Receivable Sales 3500 3500 Cost of Goods Sold ... View full answer
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