LAKESHORE TEA COMPANY 
Please include a T-account with trail marks.
Lakeshore Tea Company Inc. (Lakeshore) was launched by Anna Davis in 2019. The company operated as an herbal tea processor and supplier in Mississauga, Ontario. Davis imported herbs and tea leaves from a variety of sources across the globe. Over its first two years of operations, Lakeshore experienced significant growth and began supplying a variety of restaurants, health food stores, and small grocery outlets in the Greater Toronto Area. Apart from small orders from friends and family, which were usually paid for in cash, all of Lakeshore's sales were made on credit. Payment terms for all credit sales were 3/8, net 301 Davis totalled cash sales and prepared the company's financial statements on a monthly basis. 2 Lakeshore's April 30, 2021, statement of financial position included the following selected account balances: 3 During May 2021, Davis recorded the following notes about Lakeshore's transactions: 4 May 1 Great Lakes Grocery purchased a large quantity of Lakeshore's product for $2,834, on credit. May 3 Email received from Great Lakes Grocery with a complaint that multiple packages were improperly sealed. Agreed to reduce Great Lakes Grocery's account by $230. May 4 Ordered supply of tea leaves from Mangrove Trading Co. in Colombo, Sri Lanka. The order totalled $4,765 with terms of 10 EOM, FOB Mississauga. May 5 Received $2,256 payment from Credit Valley Health-Mart for goods purchased on credit on April 24, 2021. 1 All discounts were calculated on the invoice price net of returns and allowances. 2 Financial statements were prepared using a periodic inventory system. 3 All currency amounts in CA\$ unless otherwise specified. 4 All credit terms were calculated from the date of ownership. May 7 Electronic funds transfer arrived from Great Lakes Grocery as payment for goods sold on May 1. May 8 Received electronic confirmation that the shipment from Mangrove Trading Co. had left. May 10 Paid Nairobi Organic Wholesale Ltd. for an order costing \$3,902, which arrived on April 27 , 2021 , with credit terms of 2/15,n/30.5 May 11 Streetsville Health Food Co-op made a credit purchase of an assortment of Lakeshore's teas for $756. Cost of the goods sold to the co-op was $437. May 13 Sold \$4,229 of merchandise to Upper Canada Fine Foods (UCFF) on credit. May 14 Ordered a variety of herbs from Escarpment Herbs, Lakeshore's preferred local supplier. The herbs were shipped later that day. The cost of the order amounted to $1,016 and shipping charges were an additional $68. Lakeshore had always made use of the generous discount terms offered by Escarpment Herbs in past orders. 6 May 17 Signed for the arrival of the order from Escarpment Herbs. May 18 Two bags of herbs from the May 14 order were damaged. Returned the bags and Escarpment Herbs reduced Lakeshore's account by $56. May 19 Informed by purchasing manager at UCFF that $168 worth of product had been purchased in error. Goods were returned to Lakeshore this afternoon. Given that UCFF was a large and important customer of Lakeshore, UCFF's account would be adjusted accordingly. May 22 Cheque received from Streetsville Health Food Co-op for goods sold on May 11. May 25 Shipment received from Mangrove Trading Co. (ordered on May 4). May 26 Electronic funds transfer sent to Escarpment Herbs for full payment of amount owed. May 29 Received $1,350 from UCFF in partial payment of its outstanding account with the remainder promised to be paid in June. May 31 Cash sales for the month amounted to $1,138. At the close of business on May 31, 2021, Davis performed a physical inventory count. Based on this count, the total cost of goods remaining on hand was $6,027. REQUIRED 1. Record, using a super-T, all opening balances, transactions, and adjusting entries relating to Lakeshore's merchandising operations for the month ending May 31, 2021. 2. Prepare the revenue and cost of goods sold sections as they would appear on Lakeshore's statement of earnings for the month ending May 31, 2021. 5 Shipping terms were FOB Destination. 6 Escarpment Herbs shipped all products FOB shipping point with credit terms of 5/10, n/45
