Jordan Footwear sells athletic shoes and uses the perpetual inventory system. During June, Jordan engaged in the following transactions its first month of operations:
a. On June 1, Jordan purchased, on credit, 100 pairs of basketball shoes and 210 pairs of running shoes with credit terms of 2/10, n/30. The basketball shoes were purchased at a cost of $85 per pair, and the running shoes were purchased at a cost of $60 per pair. Jordan paid Mole Trucking $310 cash to transport the shoes from the manufacturer to Jordan’s warehouse, shipping terms were F.O.B. shipping point, and the items were shipped on June 1 and arrived on June 4.
b. On June 2, Jordan purchased 88 pairs of cross-training shoes for cash. The shoes cost Jordan $65 per pair.
c. On June 6, Jordan purchased 125 pairs of tennis shoes on credit. Credit terms were 2/10, n/25. The shoes were purchased at a cost of $45 per pair.
d. On June 10, Jordan paid for the purchase of the basketball shoes and the running shoes in transaction (a).
e. On June 12, Jordan determined that $585 of the tennis shoes were defective. Jordan returned the defective merchandise to the manufacturer.
f. On June 18, Jordan sold 50 pairs of basketball shoes at $116 per pair, 92 pairs of running shoes for $85 per pair, 21 pairs of cross-training shoes for $100 per pair, and 48 pairs of tennis shoes for $68 per pair. All sales were for cash. The cost of the merchandise sold was $13,295.
g. On June 21, customers returned 10 pairs of the basketball shoes purchased on June 18. The cost of the merchandise returned was $850.
h. On June 23, Jordan sold another 20 pairs of basketball shoes, on credit, for $116 per pair and 15 pairs of cross-training shoes for $100 cash per pair. The cost of the merchandise sold was $2,675.
i. On June 30, Jordan paid for the June 6 purchase of tennis shoes less the return on June 12.
j. On June 30, Jordan purchased 60 pairs of basketball shoes, on credit, for $85 each. The shoes were shipped F.O.B. destination and arrived at Jordan on July 3.
Required:
1. Prepare the journal entries to record the sale and purchase transactions for Jordan during June 2011.
2. Assuming operating expenses of $5,300 and income taxes of $365, prepare Jordan’s income statement for June 2011.