Exercises 9-4 Transaction Analysis

Pollys Cards & Gifts Shop had the following transactions during the year:

Pollys purchased inventory on account from a supplier for $8,00. Assume that Pollys uses a periodic inventory system.

On May 1, land was purchased for $44,500. A 20% down payment was made, and an 18-month, 8% note was signed for the remainder.

Pollys returned $450 worth of inventory purchased in (a), which was found broken when the inventory was received.

Pollys paid the balance due on the purchase of inventory.

On June 1, Polly signed a one-year, $15,000 note to First State Bank and received $13,800.

Pollys sold 200 gift certificates for $25 each for cash. Sales of gift certificates are recorded as a liability. At year-end, 35% of the gift certificates had been redeemed.

Sales for the year were $120,000, of which 90% were for cash. State sales tax of 6% applied to all sales must be remitted to the state by January 31.

Required:

1. Record all necessary journal entries relating to these transactions. (I would like to see each in table form similar to below)

	Accounts Payable
	Purchase
	To record purchase of inventory.
	Balance Sheet			Income Statement
	Assets = Liabilities +		Stockholders Equity	Revenues Expenses =Net Income
		Accounts Payable 8000	Purchase -8,000	Purchase -8,000			8,000