At the beginning of the current season, the ledger of Village Tennis Shop showed Cash

$2,500; Merchandise Inventory $1,700; and Common Stock $4,200. The following
transactions
were completed during April.
Apr. 4 Purchased racquets and balls from Denton Co. $740, terms 3/10, n/30.
6 Paid freight on Denton Co. purchase $60.
8 Sold merchandise to members $900, terms n/30.
10 Received credit of $40 from Denton Co. for a damaged racquet that was returned.
11 Purchased tennis shoes from Newbee Sports for cash $300.
13 Paid Denton Co. in full.
14 Purchased tennis shirts and shorts from Venus’s Sportswear $600, terms 2/10, n/60.
15 Received cash refund of $50 from Newbee Sports for damaged merchandise that was
returned.
17 Paid freight on Venus’s Sportswear purchase $30.
18 Sold merchandise to members $1,000, terms n/30.
20 Received $500 in cash from members in settlement of their accounts.
21 Paid Venus’s Sportswear in full.
27 Granted an allowance of $30 to members for tennis clothing that did not fit properly.
30 Received cash payments on account from members $500.
234 Chapter 5 Accounting for Merchandising Operations
(c) Total debits $6,160
Determine cost of goods sold
and gross profit under periodic
approach.
(SO 6, 7)
Gross profit $310,300
Calculate missing amounts and
assess profitability.
(SO 6, 7)
(a) 2007 $141,600
(c) 2007 Ending accts payable
$15,000
Journalize, post, and prepare
trial balance and partial income
statement using periodic
approach.
(SO 7, 8)
The chart of accounts for the tennis shop includes Cash; Accounts Receivable;
Merchandise
Inventory; Accounts Payable; Common Stock; Sales; Sales Returns and Allowances;
Purchases;
Purchase Returns and Allowances; Purchase Discounts; and Freight-in.
Instructions
(a) Journalize the April transactions using a periodic inventory system.
(b) Using T accounts, enter the beginning balances in the ledger accounts and post the
April
transactions.
(c) Prepare a trial balance on April 30, 2008.
(d) Prepare an income statement through gross profit, assuming merchandise inventory
on hand
at April 30 is $2,296

(a) General Journal

Date Account Titles and Explanation Debit Credit
Apr. 4 Purchases................................................................................. 740
Accounts Payable.......................................................... 740

 6 Freight-in................................................................................. 60
Cash................................................................................ 60

 8 Accounts Receivable...............................................................   900

Sales................................................................................   900

10 Accounts Payable.................................................................... 40
Purchase Returns and Allowances.............................. 40

11 Purchases................................................................................. 300
Cash................................................................................ 300

13 Accounts Payable ($740 – $40)...............................................   700

Purchase Discounts ($700 X 3%).................................   21
Cash................................................................................ 679

14 Purchases................................................................................. 600
Accounts Payable.......................................................... 600

15 Cash   50
Purchase Returns and Allowances..............................   50

17 Freight-in................................................................................. 30
Cash................................................................................ 30

18 Accounts Receivable............................................................... 1,000

Sales................................................................................ 1,000

20 Cash   500
 Accounts Receivable.....................................................   500

21 Accounts Payable.................................................................... 600

Purchase Discounts ($600 X 2%)................................. 12
Cash................................................................................ 588
Date Account Titles and Explanation Debit Credit
Apr.  27 Sales Returns and Allowances.............................................. 30
Accounts Receivable.................................................... 30

 30 Cash   500

Accounts Receivable....................................................   500

(b)
Cash Accounts Payable
4/1 Bal. 2,500 4/6 60 4/10 40 4/4 740
4/15 50 4/11 300 4/13 700 4/14 600
4/20 500 4/13 679 4/21 600
4/30 500 4/17 30 4/30 Bal. 0
4/21 588
4/30 Bal. 1,893 Common Stock
4/1 Bal. 4,200
Accounts Receivable 4/30 Bal. 4,200
4/8 900 4/20 500
4/18 1,000 4/27 30 Sales
4/30 500 4/8 900
4/30 Bal. 870 4/18 1,000
4/30 Bal. 1,900
Merchandise Inventory
4/1 Bal. 1,700 Purchase Discounts
4/30 Bal. 1,700 4/13 21
4/21 12
Sales Returns and Allowances 4/30 Bal. 33
4/27 30
4/30 Bal. 30 Freight-in
4/6 60
Purchases 4/17 30
4/4 740 4/30 Bal. 90
4/11 300
4/14 600
4/30 Bal. 1,640
 Purchase
Returns and Allowances
4/10 40
4/15 50
4/30 Bal. 90

(c) VILLAGE TENNIS SHOP

Trial Balance
April 30, 2008

Debit Credit
Cash.................................................................................................. $1,893
Accounts Receivable.......................................................................   870
Merchandise Inventory..................................................................  1,700
Common Stock................................................................................ $4,200
Sales.................................................................................................. 1,900
Sales Returns and Allowances........................................................ 30
Purchases......................................................................................... 1,640
Purchase Returns and Allowances................................................ 90
Purchase Discounts......................................................................... 33
Freight-in......................................................................................... 90
$6,223 $6,223

VILLAGE TENNIS SHOP

Income Statement (Partial)
For the Month Ended April 30, 2008

Sales revenues
Sales............................................................... $1,900
Less: Sales returns and
  allowances...................................
30
Net sales ......................................................  1,870
Cost of goods sold
Inventory, April 1......................................... $1,700
Purchases ...........................................$1,640
Less:Purchase returns................................. $90
 and allowances...........................
Purchase discounts........................ 33 123
Net purchases............................................... 1,517
 Add: Freight-in............................................ 90
Cost of goods purchased.............................. 1,607
Cost of goods available
for sale ................................................ 3,307
Inventory, April 30....................................... 2,296
Cost of goods sold................................
1,011
Gross profit............................................................
$ 859