1. Assuming that CD City uses a perpetual inventory system, record the transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

At the beginning of July, CD City has a balance in inventory of $3,150. The following transactions occur during the month of July.

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Purchase CDs on account from Wholesale Music for $2,050, terms 2/10, n/30.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
July 03

July 4 Pay cash for freight charges related to the July 3 purchase from Wholesale Music, $120.

July 9 Return incorrectly ordered CDs to Wholesale Music and receive credit, $200.

July 11 Pay Wholesale Music in full.

July 12 Sell CDs to customers on account, $5,300, that had a cost of $2,750.

July 15 Receive full payment from customers related to the sale on July 12.

July 18 Purchase CDs on account from Music Supply for $2,850, terms 2/10, n/30.

July 22 Sell CDs to customers for cash, $3,950, that had a cost of $2,250.

July 28 Return CDs to Music Supply and receive credit of $250.

July 30 Pay Music Supply in full.

Problem 6-3A Part 2

2. Prepare the top section of the multiple-step income statement through gross profit for the month of July.

CD CITY
Multiple-step Income Statement (partial)
For the month of July