Reference no: EM132220957
Question - Winters Hardware Store completed the following merchandising transactions in the month of May. At the beginning of May, Winters ledger showed Cash of $ 8,000 and Common Stock of $ 8,000.
May 1 Purchased merchandise on account from Black Wholesale Supply for $ 8,000, terms 1/10, n/30.
May 2 Sold merchandise on account for $ 4,400, terms 2/10, n/30. The cost of the merchandise sold was $ 3,300.
May 5 Received credit from Black Wholesale Supply for merchandise returned $ 200.
May 9 Received collections in full, less discounts, from customers billed on May 2.
May 10 Paid Black Wholesale Supply in full, less discount.
May 11 Purchased supplies for cash $ 900.
May 12 Purchased merchandise for cash $ 3,100.
May 15 Received $ 230 refund for return of poor-quality merchandise from supplier on cash purchase.
May 17 Purchased merchandise from Wilhelm Distributors for $ 2,500, terms 2/10, n/30.
May 19 Paid freight on May 17 purchase $ 250.
May 24 Sold merchandise for cash $ 5,500. The cost of the merchandise sold was $ 4,100.
May 25 Purchased merchandise from Clasps Inc. for $ 800, terms 3/10, n/30.
May 27 Paid Wilhelm Distributors in full, less discount.
May 29 Made refunds to cash customers for returned merchandise $ 124. The returned merchandise had cost $ 90.
May 31 Sold merchandise on account for $ 1,280, terms n/30. The cost of the merchandise sold was $ 830.
Required -
Journalize the transactions using a perpetual inventory system.
Post the transactions to T-accounts. Be sure to enter the beginning cash and common stock balances.
Prepare an income statement through gross profit for the month of May 2017.
Calculate the profit margin and the gross profit rate. (Assume operating expenses were $ 1,400.).