Janssen Hardware Store completed the following merchandising transactions in the month of May. At the beginning of May, Janssen’s ledger showed Cash of $11,274 and Common Stock of $11,274. May 1 Purchased merchandise on account from Vanco Wholesale Supply for $8,000, terms 1/10, n/30. 2 Sold merchandise on account for $5,600, terms 2/10, n/30. The cost of the merchandise sold was $4,200. 5 Received credit from Vanco Wholesale Supply for merchandise returned $400. 9 Received collections in full, less discounts, from customers billed on May 2. 10 Paid Vanco Wholesale Supply in full, less discount. 11 Purchased supplies for cash $1,268. 12 Purchased merchandise for cash $4,369. 15 Received $324 refund for return of poor-quality merchandise from supplier on cash purchase. 17 Purchased merchandise from Strickler Distributors for $3,500, terms 2/10, n/30. 19 Paid freight on May 17 purchase $352. 24 Sold merchandise for cash $7,751. The cost of the merchandise sold was $5,778. 25 Purchased merchandise from Fasteners Inc. for $1,127, terms 3/10, n/30. 27 Paid Strickler Distributors in full, less discount. 29 Made refunds to cash customers for returned merchandise $134. The returned merchandise had cost $101. 31 Sold merchandise on account for $1,804, terms n/30. The cost of the merchandise sold was $1,170. a. Journalize the transactions using a perpetual inventory system. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) b. Post the transactions to T accounts. (Post entries in the order of journal entries posted in part 1.) c. Prepare an income statement through gross profit for the month of May 2012. d. Calculate the profit margin ratio and the gross profit rate. (Assume operating expenses were $1,973.) (Round answers to 0 decimal places, e.g. 15%.)

Problem 5-1A

Janssen Hardware Store completed the following merchandising transactions in the month of May. At the beginning of May, Janssen’s ledger showed Cash of $11,274 and Common Stock of $11,274.

May 1		Purchased merchandise on account from Vanco Wholesale Supply for $8,000, terms 1/10, n/30.
2		Sold merchandise on account for $5,600, terms 2/10, n/30. The cost of the merchandise sold was $4,200.
5		Received credit from Vanco Wholesale Supply for merchandise returned $400.
9		Received collections in full, less discounts, from customers billed on May 2.
10		Paid Vanco Wholesale Supply in full, less discount.
11		Purchased supplies for cash $1,268.
12		Purchased merchandise for cash $4,369.
15		Received $324 refund for return of poor-quality merchandise from supplier on cash purchase.
17		Purchased merchandise from Strickler Distributors for $3,500, terms 2/10, n/30.
19		Paid freight on May 17 purchase $352.
24		Sold merchandise for cash $7,751. The cost of the merchandise sold was $5,778.
25		Purchased merchandise from Fasteners Inc. for $1,127, terms 3/10, n/30.
27		Paid Strickler Distributors in full, less discount.
29		Made refunds to cash customers for returned merchandise $134. The returned merchandise had cost $101.
31		Sold merchandise on account for $1,804, terms n/30. The cost of the merchandise sold was $1,170.

a.       Journalize the transactions using a perpetual inventory system. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

b.      Post the transactions to T accounts. (Post entries in the order of journal entries posted in part 1.)

c.       Prepare an income statement through gross profit for the month of May 2012.

d.      Calculate the profit margin ratio and the gross profit rate. (Assume operating expenses were $1,973.) (Round answers to 0 decimal places, e.g. 15%.)

 

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