3 4 7 First Choice Ltd. completed the following merchandising transactions in the month of May 2021. At the beginning of May, First Choice's ledger showed Cash $7,200; Accounts Receivable $2,000; Inventory $3.600; Common Shares $8,000; and Retained Earnings $4,800. First Choice has experienced a return rate of 2% of sales and uses a perpetual inventory system. 1 Purchased merchandise on account from Depot Wholesale Supply Ltd. for $5,440, terms 1/10, 1/30, FOB May shipping point Freight charges of $140 were paid by the appropriate party on the merchandise purchased on May 1. Sold merchandise on account to Ry Company for $3,600, terms n/30, FOB destination. The cost of the merchandise was $2,500. Freight charges of $88 were paid by the appropriate party on the May 4 sale. Received a $140 credit from Depot Wholesale Supply when merchandise was returned. Paid Depot Wholesale Supply in full. Purchased supplies for $400 cash. Received payment in full from Ry Company for merchandise sold on account on May 4. 15 Collected $960 of the accounts receivable outstanding at the beginning of the month. All accounts were originally sold on terms of n/30. Purchased merchandise from Harlow Distributors Inc. for $2,400, terms n/30, FOB destination. Freight of $48 was paid by the appropriate party on the May 18 purchase of merchandise. Sold merchandise to various customers for $6,800 cash. The cost of the merchandise was $3,900. 29 Paid a $96 cash refund to customers for returned merchandise. The cost of the returned merchandise was $56. It was restored to inventory. 31 A physical inventory count was taken and determined that there was $4,880 of inventory on hand. Prepare any adjustment required. 8 9 11 14 18 21 22 May 31 Cost of Goods Sold 168 Inventory