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Problem 5-7B Four Oaks Pro Shop

Price: $3.99


*P5-7B At the beginning of the current season on April 1, the ledger of Four Oaks Pro Shop
showed Cash $2,500; Merchandise Inventory $3,500; and Common Stock $6,000. These transactions
occured during April 2008.
Apr. 5 Purchased golf bags, clubs, and balls on account from Hardee Co. $2,200, FOB shipping
point, terms 2/10, n/60.
7 Paid freight on Hardee Co. purchases $80.
9 Received credit from Hardee Co. for merchandise returned $200.
10 Sold merchandise on account to members $950, terms n/30.
12 Purchased golf shoes, sweaters, and other accessories on account from Arrow
Sportswear $460, terms 1/10, n/30.
14 Paid Hardee Co. in full.
17 Received credit from Arrow Sportswear for merchandise returned $60.
20 Made sales on account to members $1,000, terms n/30.
21 Paid Arrow Sportswear in full.
27 Granted credit to members for clothing that did not fit properly $75.
30 Received payments on account from members $1,100.
The chart of accounts for the pro 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 $4,524.

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