Fixit Hardware Pty Ltd completed the following inventory transactions in the month of May. At the beginning of May, Fixit Hardware Pty Ltd’s ledger showed Cash $2500 and Share Capital $2500. 

Fixit Hardware Pty Ltd’s chart of accounts includes 100 Cash, 110 Accounts Receivable, 120 Inventory, 130 Supplies, 200 Accounts Payable, 300 Share Capital, 400 Sales, 405 Sales Returns and Allowances, 410 Discount Received, 500 Discount Allowed, 505 Cost of Sales, and 510 Freight Inwards. 

Required

(a) Journalise the transactions using a perpetual inventory system. 

(b) Post the transactions to T accounts. Be sure to enter the beginning Cash and Share Capital balances.

(c) Prepare a statement of profit or loss up to gross profit for the month of May.

(d) Calculate the profit margin and the gross profit ratio. (Assume operating expenses were $700 and ignore the effects of income tax for this question.)

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May 2 Sold inventory on account for $2250, terms 2/7, n/30. The cost of the inventory sold was $1500. Purchased inventory on account from Depot Wholesale Supply for $3000, terms 2/7, n/30. Returned inventory and received credit from Depot Wholesale Supply for $100. Received amounts owing from customers invoiced on sales of $2250 on 2 May. Paid Depot Wholesale Supply the amount owing. Purchased supplies for cash $450. Purchased inventory for cash $1200. Returned goods and received a refund for poor-quality inventory from supplier on cash purchase $115. Purchased inventory from Harlow Distributors for $950, terms 2/7, n/30. Paid freight to We Deliver on 20 May purchase $125. Sold inventory for cash $3100. The cost of the inventory sold was $2170. 3 5 9 1125 10 15 20 21 24 25 27 29 31 Purchased inventory from Horicon Ltd for $500, terms 2/7, n/30. Paid Harlow Distributors the amount outstanding. Made refunds to cash customers for inventory sold for $50. The returned inventory had cost $35. The inventory returned was not faulty. Sold inventory on account for $800, terms n/30. The cost of the inventory sold was $560.