At the beginning of July, CD City has a balance in inventory of $3,100. The following transactions occur during the month of July. July 3 Purchase CDs on account from Wholesale Music for $2,000, terms 1/10, n/30. July 4 Pay cash for freight charges related to the July 3 purchase from Wholesale Music, $110. July 9 Return incorrectly ordered CDs to Wholesale Music and receive credit, $300. July 11 Pay Wholesale Music in full. July 12 Sell CDs to customers on account, $5,200, that had a cost of $2,700. July 15 Receive full payment from customers related to the sale on July 12. July 18 Purchase CDs on account from Music Supply for $2,800, terms 1/10, n/30. July 22 Sell CDs to customers for cash, $3,900, that had a cost of $2,200. July 28 Return CDs to Music Supply and receive credit of $240. July 30 Pay Music Supply in full.

1. Assuming that CD City uses a perpetual inventory system, record the transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Purchase CDs on account from Wholesale Music for $2,000, terms 1/10, n/30.

Pay cash for freight charges related to the July 3 purchase from Wholesale Music, $110.

Return incorrectly ordered CDs to Wholesale Music and receive credit, $300.

Pay Wholesale Music in full.

Sell CDs to customers on account, $5,200, that had a cost of $2,700. Record the sale of inventory on account.

Sell CDs to customers on account, $5,200, that had a cost of $2,700. Record the cost of inventory sold.

Receive full payment from customers related to the sale on July 12.

Purchase CDs on account from Music Supply for $2,800, terms 1/10, n/30

Sell CDs to customers for cash, $3,900, that had a cost of $2,200. Record the sale of inventory for cash.

Sell CDs to customers for cash, $3,900, that had a cost of $2,200. Record the cost of inventory sold.

Return CDs to Music Supply and receive credit of $240.

Pay Music Supply in full

2. Prepare the top section of the multiple-step income statement through gross profit for the month of July.