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    At the beginning of the current season, the ledger of Villag

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    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.

    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.

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    Solution Summary

    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.

    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.

    $2.49

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