Maggie Zine Distributing Company completed these merchandising transactions in the month of April. At the beginning of April, the ledger of Maggie Zine showed Cash of $9,000 and Common Stock of $9,000.

Purchased merchandise on account from Kentucky Supply Co. $5,900, terms 2/10, n/30.

Sold merchandise on account $5,000, terms 2/10, n/30. The cost of the merchandise sold was $4,000.

5 Paid $200 freight on April 4 sale.
6 Received credit from Kentucky Supply Co. for merchandise returned $300.
11 Paid Kentucky Supply Co. in full, less discount.
13 Received collections in full, less discounts, from customers billed on April 4.
14 Purchased merchandise for cash $4,400.
16 Received refund from supplier on cash purchase of April 14, $500.
18 Purchased merchandise from Pigeon Distributors $4,200, terms 2/10, n/30.
20 Paid freight on April 18 purchase $100.
23 Sold merchandise for cash $7,400. The cost of the merchandise sold was $6,120.
26 Purchased merchandise for cash $2,300.
27 Paid Pigeon Distributors in full, less discount.
29 Made refunds to cash customers for defective merchandise $90. The returned merchandise had a cost of $70.
30 Sold merchandise on account $3,700, terms n/30. The cost of the merchandise sold was $3,000.
Maggie Zine Distributing Company’s chart of accounts includes Cash, Accounts Receivable, Merchandise Inventory, Accounts Payable, Common Stock, Sales, Sales Returns and Allowances, Sales Discounts, Cost of Goods Sold, and Freight-out.
Instructions

(a) Journalize the transactions.

(b) Post the transactions to T accounts. Be sure to enter the beginning cash and common stock balances. eos oe

(c) Prepare the income statement through gross profit for the month of April.

(d) Calculate the profit margin ratio and the gross profit rate. (Assume operating expenses were $900.)