Olaf Distributing Company completed the following merchandising transactions in the

month of April. At the beginning of April, the ledger of Olaf showed Cash of $9,000 and
M. Olaf, Capital of $9,000.
April 2 Purchased merchandise on account from Dakota Supply Co. $6,900, terms 1/10,
n/30.
4 Sold merchandise on account $5,500, FOB destination, terms 1/10, n/30. The cost of
the merchandise sold was $4,100.
5 Paid $240 freight on April 4 sale.
6 Received credit from Dakota Supply Co. for merchandise returned $500.
11 Paid Dakota Supply Co. in full, less discount. 13 Received collections in full, less
discounts, from customers billed on April 4.
14 Purchased merchandise for cash $3,800.
16 Received refund from supplier for returned goods on cash purchase of April 14, $500.
18 Purchased merchandise from Skywalker Distributors $4,500, FOB shipping point,
terms 2/10, n/30.
20 Paid freight on April 18 purchase $100.
23 Sold merchandise for cash $6,400.The merchandise sold had a cost of $5,120.
26 Purchased merchandise for cash $2,300.
27 Paid Skywalker Distributors in full, less discount.
29 Made refunds to cash customers for defective merchandise $90. The returned
merchandise had a scrap value of $30.
30 Sold merchandise on account $3,700, terms n/30.The cost of the merchandise sold was
$2,800.
Olaf Company's chart of accounts includes the following: No. 101 Cash, No. 112
Accounts Receivable, No. 120 Merchandise Inventory, No. 201 Accounts Payable, No.
301 M. Olaf, Capital, No. 401 Sales, No. 412 Sales Returns and Allowances, No. 414
Sales Discounts, No. 505 Cost of Goods Sold, and No. 644 Freight-out.
(a)
General Journal
Date
Apr. 2

Account Titles and Explanation

Merchandise Inventory.........................................
Accounts Payable........................................

Ref.
120
201

Debit
6,900

Accounts Receivable.............................................
Sales..............................................................
Cost of Goods Sold................................................
Merchandise Inventory..............................

112
401
505
120

5,500

Freight-out.............................................................
Cash..............................................................

644
101

240

Accounts Payable..................................................
Merchandise Inventory..............................

201
120

500

Credit
6,900

5,500
4,100
4,100

240

500

11

13

14

16

18

20

Accounts Payable ($6,900 $500).........................

Merchandise Inventory..............................
($6,400 X 1%)
Cash..............................................................

201
120

6,400

Cash
Sales Discounts ($5,500 X 1%).............................
Accounts Receivable...................................

101
414
112

5,445
55

Merchandise Inventory........................................
Cash..............................................................

120
101

3,800

Cash

500

Merchandise Inventory..............................

101
120

Merchandise Inventory........................................
Accounts Payable........................................

120
201

4,500

Merchandise Inventory........................................
Cash..............................................................

120
101

100

Account Titles and Explanation

Cash
Sales..............................................................
Cost of Goods Sold................................................
Merchandise Inventory..............................

Ref.
101
401
505
120

Debit
6,400

Merchandise Inventory........................................
Cash..............................................................

120
101

2,300

Accounts Payable..................................................
Merchandise Inventory..............................
($4,500 X 2%)
Cash..............................................................

201
120

4,500

Sales Returns and Allowances.............................

Cash..............................................................
Merchandise Inventory........................................

412
101
120

64

101

6,336

5,500

3,800

500

4,500

100

General Journal
Date
Apr. 23

26

27

29

Credit
6,400

5,120
5,120

2,300

90

101

4,410
90
90
30

30

Cost of Goods Sold......................................

505

Accounts Receivable.............................................
Sales..............................................................
Cost of Goods Sold................................................
Merchandise Inventory..............................

112
401
505
120

30
3,700
3,700
2,800
2,800

(b)
Cash
Date
Apr.

Explanation
1
5
11
13
14
16
20
23
26
27
29

Balance

Ref.

J1
J1
J1
J1
J1
J1
J1
J1
J1
J1

Debit

Credit

Balance

2,300
4,410
90

9,000
8,760
2,424
7,869
4,069
4,569
4,469
10,869
8,569
4,159
4,069

Credit

Balance

5,500

5,500
0
3,700

Credit

Balance

240
6,336
5,445
3,800
500
100
6,400

Accounts Receivable
Date
Apr.

Explanation
4
13
30

Ref.

Debit

J1
J1
J1

5,500

Ref.

Debit

J1
J1
J1
J1
J1
J1
J1

6,900

3,700

Merchandise Inventory
Date
Apr.

Explanation
2
4
6
11
14
16
18

4,100
500
64
3,800
500
4,500

6,900
2,800
2,300
2,236
6,036
5,536
10,036

20
23
26
27
29
30
Accounts Payable

J1
J1
J1
J1
J1
J1

100

Date

Ref.

Debit

Apr.

Explanation
2
6
11
18
27

J1
J1
J1
J1
J1

2,800

10,136
5,016
7,316
7,226
7,256
4,456

Credit

Balance

6,900

6,900
6,400
0
4,500
0

5,120
2,300
90
30

500
6,400
4,500
4,500

Common Stock
Date
Apr.

Explanation
1

Balance

Ref.

Debit

Credit

Balance
9,000

Sales
Date
Apr.

Explanation
4
23
30

Ref.

Debit

J1
J1
J1

Credit

Balance

5,500
6,400
3,700

5,500
11,900
15,600

Credit

Balance

Sales Returns and Allowances

Date
Apr.

Explanation
29

Ref.

Debit

J1

90

Ref.

Debit

J1

55

90

Sales Discounts
Date
Apr.

Explanation
13

Cost of Goods Sold

Credit

Balance
55

Date
Apr.

Explanation
4
23
29
30

Ref.

Debit

J1
J1
J1
J1

4,100
5,120

Credit

Balance
4,100
9,220
9,190
11,990

30
2,800

Freight-out
Date
Apr.

(c)

Explanation
5

Ref.

Debit

J1

240

Credit

Balance
240

OLAF DISTRIBUTING COMPANY

Income Statement (Partial)
For the Month Ended April 30, 2008
Sales revenues
Sales.............................................................................................
$15,600
Less: Sales returns and allowances.........................................
Sales discounts.............................................................

145
Net sales.......................................................................................
15,455
Cost of goods sold.................................................................................
11,990
Gross profit...........................................................................................
$3,465

$90
55