Problem 6-4

Prepare and post journal entries, prepare trial balance, classified income statement, and classified balance sheet (L.O. 1-6)

The Western Wear Company, a wholesaler of western wear clothing, sells to retailers. The company entered into the following transactions in May 2012:

May	1	The Western Wear Company was organized as a corporation. The stockholders purchased stock at par for the following assets in the business: $462,000 cash, $168,000 merchandise, and $105,000 land.
	1	Paid rent on administrative offices for May, $25,200.
	5	The company purchased merchandise from Carl Company on account, $189,000; terms 2/10, n/30. Freight terms were FOB shipping point, freight collect.
	8	Cash of $8,400 was paid to a trucking company for delivery of the merchandise purchased May 5.
	14	The company sold merchandise on account, $315,000; terms 2/10, n/30.
	15	Paid Carl Company the amount due on the purchase of May 5.
	16	Of the merchandise sold May 14, $13,860 was returned for credit.
	19	Salaries for services received were paid for May as follows: office employees, $16,800; salespersons, $33,600.
	24	The company collected the amount due on $126,000 of the accounts receivable arising from the sale of May 14.
	25	The company purchased merchandise on account from Bond Company, $151,200; terms 2/10, n/30. Freight terms were FOB shipping point, freight collect.
	27	Of the merchandise purchased May 25, $25,200 was returned to the vendor.
	28	A trucking company was paid $2,100 for delivery to The Western Wear Company of the goods purchased May 25.
	29	The company sold merchandise on open account, $15,120; terms 2/10, n/30.
	30	Cash sales were $74,088.
	30	Cash of $100,800 was received from the sale of May 14.
	31	Paid Bond Company for the merchandise purchased on May 25, taking into consideration the merchandise returned on May 27.

Additional data

The inventory on hand at the close of business on May 31 is $299,040.

Required

From the data given for The Western Wear Company:

a. Prepare journal entries for the transactions.

b. Post the journal entries to the proper ledger accounts. Use the account numbers in the chart of accounts shown in a separate file at the end of the text. Assume that all postings are from page 15 of the general journal. (There were no adjusting journal entries.)

c. Prepare a trial balance.

d. Prepare a classified income statement for the month ended May 31, 2012.

e. Prepare a classified balance sheet as of May 31, 2012.