Chi Chi Ramos, a former professional golf star, operates Chi Chi's Pro Shop at Bay Golf Course. At the beginning of the current season on April 1, the ledger of Chi Chi's Pro Shop showed Cash \(\$ 2,500\); Merchandise Inventory \(\$ 3,500\); and Common Stock \(\$ 6,000\).

Journalize, post, and prepare The following transactions were completed during April:

Apr. 5 Purchased golf bags, clubs, and balls on account from Balata Co. \(\$ 1,600\), terms \(2 / 10, \mathrm{n} / 60\).
7 Paid freight on Balata purchase \(\$ 80\).
9 Received credit from Balata Co. for merchandise returned \(\$ 100\).
10 Sold merchandise on account to members \(\$ 900\), terms \(\mathrm{n} / 30\). The merchandise sold had a cost of \(\$ 630\).
12 Purchased golf shoes, sweaters, and other accessories on account from Arrow Sportswear \(\$ 660\), terms \(1 / 10, \mathrm{n} / 30\).

14 Paid Balata Co. in full.
17 Received credit from Arrow Sportswear for merchandise returned \(\$ 60\).
20 Made sales on account to members \(\$ 700\), terms \(n / 30\). The cost of the merchandise sold was \(\$ 490\).
21 Paid Arrow Sportswear in full.
27 Granted an allowance to members for clothing that did not fit properly \(\$ 30\).
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, and Cost of Goods Sold.
\section*{Instructions}

(a) Journalize the April transactions using a perpetual inventory system.

(b) Using \(\mathrm{T}\) accounts, enter the beginning balances in the ledger accounts and post the April transactions.

(c) Prepare a trial balance on April 30, 1998.

(d) Prepare an income statement through gross profit.