Problem - Latona Hardware Store completed the following merchandising transactions in the month of May. At the beginning of May, the ledger of Latona showed Cash of $4,500 and Common Stock of $4,500.
May 1 Purchased merchandise on account from Gray's Wholesale Supply $4,000, terms 2/10, n/30.
May 2 Sold merchandise on account $1,700, terms 1/10, n/30. The cost of the merchandise sold was $1,600.
May 5 Received credit from Gray's Wholesale Supply for merchandise returned $250.
May 9 Received collections in full, less discounts, from customers billed on sales of $1,700 on May 2.
May 10 Paid Gray's Wholesale Supply in full, less discount.
May 11 Purchased supplies for cash $350.
May 12 Purchased merchandise for cash $1,200.
May 15 Received refund for poor quality merchandise from supplier on cash purchase $200.
May 17 Purchased merchandise from Amland Distributors $1,100, FOB shipping point, terms 2/10, n/30.
May 19 Paid freight on May 17 purchase $160.
May 24 Sold merchandise for cash $3,300. The merchandise sold had a cost of $2,000.
May 25 Purchased merchandise from Horvath, Inc. $650, FOB destination, terms 2/10, n/30.
May 27 Paid Amland Distributors in full, less discount.
May 29 Made refunds to cash customers for defective merchandise $60. The returned merchandise had a fair value of $40.
May 31 Sold merchandise on account $1,000, terms n/30. The cost of the merchandise sold was $600.
Latona Hardware's chart of accounts includes the following: No. 101 Cash, No. 112 Accounts Receivable, No. 120 Inventory, No. 126 Supplies, No. 201 Accounts Payable, No. 311 Common Stock, No. 401 Sales Revenue, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, and No. 505 Cost of Goods Sold.
Journalize the transactions using a perpetual inventory system.
Enter the beginning cash and common stock balances and post the transactions.
Prepare an income statement through gross profit for the month of May 2017.