The following events pertain to the Uncle Joe, Inc. for March 2015, its first month of operation. The company uses the perpetual inventory system.

1) Beginning cash balance and retained earnings balance was $10,000

2) March 2: Purchased $8,500 of merchandise on account with terms 2/10, n/30, FOB shipping point.

3) March 2: Paid $500 cash for shipping charges on the previous purchase.

4) March 3: Returned $800 of the merchandise purchased on March 3.

5) March 4: Sold merchandise that cost $3,000 for $5,500 cash.

6) March 8: Recorded the discount and paid the amount due from the purchase of merchandise on March 1

Prepare the journal entry, t-accounts, income statement, statement of changes in equity and balance sheet statement.

Event No.	Account Titles		Debit	Credit
2)	Merchandise Inventory		8,500
		Accounts Payable		8,500
3)	Merchandise Inventory		500
		Cash		500
4)	Accounts Payable		800
		Merchandise Inventory		800
5a)	Cost of goods sold		3,000
		Merchandise Inventory		3,000
5b)	Cash		5,500
		Sales Revenue		5,500
6)	Accounts Payable		7,700
		Merchandise Inventory		154
		Cash		7,546

 

Cash Ledger
BAL.		7,454
	DATE	DESCRIPTION	DEBIT +	CREDIT –	BALANCE
	3/1/2015	Beginning Balance	10,000	10,000
	3/2/2015	Paid shipping charges		500	9,500
	3/4/2015	Cash from sales	5,500		15,000
	3/5/2015	Cash paid for inventory		7,546	7,454

Inventory Ledger
BAL.		5,046
	DATE	DESCRIPTION	DEBIT +	CREDIT  –	BALANCE
	3/2/2015	Purchased Inventory	8,500		8,500
	3/2/2015	Paid for shipping charges	500		9,000
	3/3/2015	Returned Merchandise		800	8,200
	3/4/2015	Sold Merchandise		3,000	5,200
	3/8/2015	Applied discount		154	5,046

Accounts Payable
BAL.		–
	DATE	DESCRIPTION	DEBIT –	CREDIT  +	BALANCE
	3/2/2015	Purchased inventory		8,500	8,500
	3/3/2015	Returned inventory	800		7,700
	3/8/2015	Paid accounts payable	7,700		–

Sales Revenue Ledger
BAL.		5,500
	DATE	DESCRIPTION	DEBIT –	CREDIT +	BALANCE
	3/4/2015	Sell merchandise inventory		5,500	5,500

Cost of Goods Sold
BAL.		3000
	DATE	DESCRIPTION	DEBIT  +	CREDIT  –	BALANCE
	3/4/2015	Sell merchandise inventory	3,000	–	3,000

Retained Earnings Ledger
BAL.		10,000
	DATE	DESCRIPTION	DEBIT –	CREDIT +	BALANCE
	3/1/2015	Beginning Balance		10,000	10,000

Trial Balance
Cash	$7,454
Merchandise Inventory	5,046
Accounts Payable		$0
Retained Earnings		10,000
Sales Revenue		5,500
Cost of Goods Sold	3,000
Totals	$15,500	$15,500

Income Statement
Revenue
Gross Sales	5000
Less: Sales Returns and Allowances	0
Net Sales	5000
Cost of Goods Sold
Cost of Goods Sold	3000
Gross Profit (Loss)	2000

Statement of Changes in Stockholders Equity
Statement of Changes in Stockholders Equity
Beginning Common Stock
Plus: Common Stock Issued
Balance: End of period
Beginning Retained Earnings	$10,000
Plus: Net Income	2,500
Less: Dividends
Ending Retained Earnings balance	$12,500
Total equity	$12,500

Balance Sheet

ASSETS

LIABILITIES

Current Assets

Current Liabilities

Cash in Bank

$7,454

Accounts Payable and Accrued Expenses

Accounts Receivable

Interest Payable

Inventory

5,046

Short-term Notes

Prepaid Expenses

Other Current Liabilities

Other Current Assets

Fixed Assets

Long-term Liabilities

Machinery and Equipment

Loans Payable

Land and Buildings

Total Liabilities

Other Fixed Assets

Accumulated Depreciation

Shareholder’s Equity

12,500

Common Stock

Other Assets

Retained Earnings

12,500

Intangibles

Total Assets

12,500.00

Total Liabilities + Equity

12,500

 

This ends lesson 8 – Next lesson 9