First Choice Ltd. completed the following merchandising transactions in the month of May 2021. At the beginning of May, First Choice's ledger showed Cash \$8,200; Accounts Receivable \$2,500; Inventory \$4,100; Common Shares \$9,000; and Retained Earnin $5,800. First Choice has experienced a return rate of 2% of sales and uses a perpetual inventory system. May 1 Purchased merchandise on account from Depot Wholesale Supply Ltd, for $5,940, terms 1/10, n/30, FOB shipping point. 3 Freight charges of $155 were paid by the appropriate party on the merchandise purchased on May 1. 4 Sold merchandise on account to Ry Company for $4,100, terms n/30. FOB destination. The cost of the merchandise was $3,000. 7 Freight charges of $98 were paid by the appropriate party on the May 4 sale. 8 Received a $140 credit from Depot Wholesale Supply when merchandise was returned. 9 Paid Depot Wholesale Supply in full. 11 Purchased supplies for $450 cash. 14 Received payment in full from Ry Company for merchandise sold on account on May 4. 15 Collected $1.060 of the accounts receivable outstanding at the beginning of the month. All accounts were originally sold on terms of n/30. 18 Purchased merchandise from Harlow Distributors inc. for $2,900, terms n/30, FOB destination. 21 Freight of $53 was paid by the appropriate party on the May 18 purchase of merchandise. 22 Sold merchandise to various customers for $7,800cash. The cost of the merchandise was $4,400. 29 Paid a $106 cash refund to customers for returned merchandise. The cost of the returned merchandise was $61. It was restored to inventor 31 A physical inventory count was taken and determined that there was $5,380 of inventory on hand. Prepare any adjustment required. Record the May transactions. (List all debit entries before credit entries. Credit occount titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the arnounts) Question 7 of 7 38.2/50 Cash Accounts Receivable Inventory Accounts Payable No Entry No Entry 1ay 22 Cash Sales Refund Liability (Sale of goods) Cost of Goods Sold Estimated Imventory Returns Inventory (Cost of goods sold recorded) Refund Lability Cash (Return of merchandise) Imventory Estimated Imventory Returns 61 Set up T accounts, enter the opening balances, and post the transactions. (Post entries in the order of journal entries presented in th previous part.) Question 7 of 7 38.2/50 Estimated Inventory Returns Common Shares Refund Liability May 29 May 4 May 22 Sales Question 7 of 7 38.2/50 Refund Liability Freight Out Retained Earnings Prepare a partial multiple-step statement of income for the month ended May 31, through to gross profit
