Reference no: EM132046157
Problem - The Western Wear Company, a wholesaler of western wear clothing, sells to retailers. The company entered into the following transactions in May 2010:
May 1 The Western Wear Company was organized as a corporation. The stockholders Purchased stock at par for the following assets in the business: USD 462,000 cash, USD 168,000 merchandise, and USD 105,000 land.
May 1 Paid rent on administrative offices for May, USD 25,200.
May 5 The company purchased merchandise from Carl Company on account, USD 189,000; terms 2/10, n/30. Freight terms were FOB shipping point, freight collect.
May 8 Cash of USD 8,400 was paid to a trucking company for delivery of the merchandise purchased May 5.
May 14 The company sold merchandise on account, USD 315,000; terms 2/10, n/30.
May 15 Paid Carl Company the amount due on the purchase of May 5.
May 16 Of the merchandise sold May 14, USD 13,860 was returned for credit.
May 19 Salaries for services received were paid for May as follows: office employees, USD 16,800; salespersons, USD 33,600.
May 24 The company collected the amount due on USD 126,000 of the accounts receivable arising from the sale of May 14.
May 25 The company purchased merchandise on account from Bond Company, USD 151,200; terms2/10, n/30. Freight terms were FOB shipping point, freight collect.
May 27 Of the merchandise purchased May 25, USD 25,200 was returned to the vendor.
May 28 A trucking company was paid USD 2,100 for delivery to The Western Wear Company of the goods purchased May 25.
May 29 The company sold merchandise on open account, USD 15,120; terms 2/10, n/30.
May 30 Cash sales were USD 74,088.
May 30 Cash of USD 100,800 was received from the sale of May 14.
May 31 Paid Bond Company for the merchandise purchased on May 25, taking into consideration the merchandise returned on May 27.
The inventory on hand at the close of business on May 31 is USD 299,040.
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.
c. Prepare a trial balance.
d. Prepare a classified income statement for the month ended 2010 May 31.
e. Prepare a classified balance sheet as of 2010 May 31.