J. Hafner, a former professional tennis star, operates Hafner's Tennis Shop at the MillerLake Resort. At the beginning of the current season, the ledger of Hafner's Tennis Shop showed Cash $2,500, Merchandise Inventory $1,700, and Common Stock $4,200. The following transactions were completed during April.
4 Purchased racquets and balls from Wellman Co. $840, FOB shipping point, terms 2/10, n/30.
6 Paid freight on purchase from Wellman Co. $40.
8 Sold merchandise to members $1,150, terms n/30. The merchandise sold had a cost of$790.
10 Received credit of $40 from Wellman Co. for a damaged racquet that was returned.
11 Purchased tennis shoes from Venus Sports for cash, $420.
13 Paid Wellman Co. in full.
14 Purchased tennis shirts and shorts from Serena's Sportswear $900, FOB shipping point, terms 3/10, n/60.
15 Received cash refund of $50 from Venus Sports for damaged merchandise that was returned.
17 Paid freight on Serena's Sportswear purchase $30.
18 Sold merchandise to members $810, terms n/30.The cost of the merchandise sold was $530.
20 Received $500 in cash from members in settlement of their accounts.
21 Paid Serena'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, $660.
The chart of accounts for the tennis shop includes the following: No. 101 Cash, No. 112 Accounts
Receivable, No. 120 Merchandise Inventory, No. 201 Accounts Payable, No. 311 Common Stock, No. 401 Sales, No. 412 Sales Returns and Allowances, No. 505 Cost of Goods Sold.
(a) Journalize the April transactions using a perpetual inventory system.
(b) Enter the beginning balances in the ledger accounts and post the April transactions. (Use J1 for the journal reference.)
(c) Prepare a trial balance on April 30, 2008.
See attached Excel file for journal entries and T-accounts. A separate tab in Excel shows the trial balance in better format.
Hafner's Tennis Shop
101 - Cash 1536
112 - Accounts receivable 770
120 - Inventory ...
The solution provides the journal entries and partial trial balance in Excel format. Explanations are also included.