After preparing the joural entries for Margin Company use the information to prepare the Partial Income Statement for Margin.

Journal entries:

1.

Prepare journal entries to record the following merchandising transactions of Margin Company, Inc., which applies the perpetual inventory system. Margin Company, Inc. offers all of its credit customers credit terms of 2/10, n/30.

May 1	Purchased merchandise from Craft Company for $7,800 under credit terms of 1/10, n/30, FOB shipping point, invoice dated May 1.
May 2	Purchased merchandise from Bow Company for $10,600 under credit terms 2/05, n/20, FOB destination.
May 4	Paid $300 cash for the freight charges on the May 1 purchase of merchandise.
May 5	Received an $800 credit memorandum from Craft Company for the return of part of the merchandise purchased on May 1.
May 6	Paid Bow Company the balance due within the discount period.
May 11	Paid Craft Company the balance due within the discount period.

May 1	Merchandise Inventory	7800
	Accounts Payable		7800
May 2	Merchandise Inventory	10600
	Accounts Payable		10600
May 4	Merchandise Inventory	300
	Cash		300
May 5	Accounts Payable	800
	Merchandise Inventory		800
May 6	Accounts Payable	10600
	Merchandise Inventory		212
	Cash		10388
May 11	Accounts Payable	7300
	Merchandise Inventory		73
	Cash		7227

Margin Co

Income Statement

for period ended May 31

Sales Revenue

Less: Sales discount

Less: Sales Return and Allowances

Net Sales

Less: cost of good sold

Gross Profit