Reference no: EM132463364

First Choice Ltd. completed the following merchandising transactions in the month of May 2018. At the beginning of May, First Choice's ledger showed Cash $6,800; Accounts Receivable $1,500; Inventory $3,100; Common Shares $7,300; and Retained Earnings $4,100. First Choice uses a perpetual inventory system.

Point 1: May1Purchased merchandise on account from Depot Wholesale Supply Ltd. for $5,700, terms 1/10, n/30, FOB shipping point.

Point 2: 3Freight charges of $150 were paid by the appropriate party on the merchandise purchased on May 1.

Point 3: 4Sold merchandise on account to Ry Company for $3,100, terms 2/10, n/30, FOB destination. The cost of the merchandise was $2,100.

Point 4: 7Freight charges of $70 were paid by the appropriate party on the May 4 sale.

Point 5: 8Received a $200 credit from Depot Wholesale Supply when merchandise was returned.

Point 6: 9Paid Depot Wholesale Supply in full.

Point 7: 11Purchased supplies for $500 cash.

Point 8: 14Received payment in full from Ry Company for merchandise sold on account on May 4.

Point 9: 15Collected $900 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.

Point 10: 18Purchased merchandise from Harlow Distributors Inc. for $2,000, terms n/30, FOB destination.

Point 11: 21Freight of $50 was paid by the appropriate party on the May 18 purchase of merchandise.

Point 12: 22Sold merchandise to various customers for $6,100 cash. The cost of the merchandise was $4,200.

Point 13: 29Paid a $100 cash refund to customers for returned merchandise. The cost of the returned merchandise was $50. It was restored to inventory.

Point 14: 31A physical inventory count was taken and determined that there was $4,200 of inventory on hand. Prepare any adjustment required.

• Record the May transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to the nearest whole dollar, e.g. 5,275.)

Question (1) Account Titles and Explanation

Question (2) Set up T accounts, enter the opening balances, and post the transactions. (Post entries in the order of journal entries presented in the previous part.)

Question (3) Prepare a partial multiple-step income statement for the month ended May 31, through to gross profit. First Choice Ltd.

Income Statement (Partial)

Question (4) Prepare the current assets section of the statement of financial position as at May 31. (List Current assets in order of liquidity.) First Choice Ltd. Statement of Financial Position (Partial)