ACC1111- homework Read chapters 6 and 7. Answer the illustrative problem on page 316, only answer part 1 and omit the entry for May 25th.

Illustrative problem page 316

The following transactions were completed by Montrose Company during May of the current year. Montrose Company uses a perpetual inventory system. May 3.Purchased merchandise on account from Floyd Co., $4,000, terms FOB shipping point, 2/10, n/30, with prepaid freight of $120 added to the invoice.

4. Purchased merchandise on account from Kramer Co., $8,500, terms FOB destination, 1/10, n/30.

5. Sold merchandise on account to C. F. Howell Co., list price $4,000, trade discount 30%, terms 2/10, n/30. The cost of the merchandise sold was $1,125.

8. Purchased office supplies for cash, $150.

10. Returned merchandise purchased on May 5 from Kramer Co., $1,300.

13. Paid Floyd Co. on accouthe nt for purchase of May 3.

14. Purchased merchandise for cash, $10,500.

15. Paid Kramer Co. on accouthe for purchase of May 5, less return of May 10.

16. Received cash on account from sale of May 6 to C. F. Howell Co.

19. Sold merchandise on MasterCard credit cards, $2,450. The cost merchandisen- dise sold was $980.

22. Sold merchandise for cash to Comer Co., $3,480. The cost of the merchandise sold was $1,400.

24. Sold merchandise on account to Smith Co., $4,350, terms n/30. The cost of the merchandise sold was $1,750.

25. Refunded Comer Co. $1,480 for returned merchandise from sale on May 22. The cost of the returned merchandise was $600.

31. Paid a service processing fee of $140 for MasterCard sales.

Instructions

1. Journalize the preceding transactions.

2. Journalize the adjusting entry for merchandise inventory shrinkage, $3,750.

3. Journalize the adjusting entries for estimated customer refunds and returns. Assume that sales of $3,000 are estimated to be refunded and inventory costing $1,800 is estimated to be returned.