Question

Record transactions and prepare a partial income statement using a perpetual inventory system (LO6-2, 6-5) The following information applies to the questions displayed below At the beginning of July, CD City has a balance in inventory of $3,400. The following transactions occur during the month of July. July 3 Purchase CDs on account from Wholesale Music for $2,300, terms 1/10, n/30 July 4 Pay cash for freight charges related to the July 3 purchase from Wholesale Music, $110. July 9 Return incorrectly ordered CDs to Wholesale Music and receive credit, $200. July 11 Pay Wholesale Music in full. July 12 Sell CDs to customers on account, $5,800, that had a cost of $3,000. July 15 Receive full payment from customers related to the sale on July 12 July 18 Purchase CDs on account from Music Supply for $3,100, terms 1/10, n/30 July 22 Sell CDs to customers for cash, $4,200, that had a cost of $2,500. July 28 Return CDs to Music Supply and receive credit of $300. July 30 Pay Music Supply in ful.

Answer 1

Answer:

Gross profit $4500

Explanation:

July-3 Dr  Inventory  2300

               Cr Accounts payable   2300

          (To record purchase of cds on account)

July-4 Dr  Inventory 110

                Cr Cash        110

        ( To record payment of freight charges associated with purchase)

July-9  Dr Accounts payable  200

               Cr Inventory                    200

    (To record purchase return)

July-11  Dr Accounts payable  (2300-200)  2100

                               Cr Cash                                   2100

      (To record payment in full of inventory purchase)

July-12.a)  Dr  Cost of goods sold  3000

                                               Cr  Inventory        3000

          b)  Dr Account receivable     5800

                                              Cr   Sales revenue  5800

     (To record sales of inventory)

July-15 Dr Cash  5800

                  Cr  Account receivable  5800

      ( To record receipt of sales)

July-18 Dr Inventory    3100

                Cr  Accounts payable   3100

        (To record purchase of inventory)

July-22.a) Dr Cost of goods sold 2500

                      Cr inventory                  2500

             b)   Dr Account receivable  4200

                           Cr sales  revenue                      4200

        (To record sales of inventory)

July-28 Dr Accounts payable  300

               Cr      Inventory               300

            (To record purchase return)

July-30  Dr  Accounts payable   3100

                    Cr Cash                           3100

           (To record payment in full of purchases made).

                                      Partial Income Statement

                                                                                                      $

Sales (5800+4200)                                                                  = 10000

less: Cost of goods sold(3000+2500)                                   = (5500)

                             Gross profit                                                     4500