Presented below is the following information related to Hans Olaf Co.

1. On April 5, purchased merchandise from D. DeVito Company for \(\$ 18,000\) terms \(2 / 10\), net \(/ 30\), FOB shipping point.

2. On April 6 paid freight costs of \(\$ 900\) on merchandise purchased from D. DeVito.

3. On April 7, purchased equipment on account for \(\$ 26,000\).

4. On April 8, returned damaged merchandise to \(\mathrm{D}\). DeVito Company and was granted a \(\$ 3,000\) allowance.

5. On April 15 paid the amount due to D. DeVito Company in full.

\section*{Instructions}

(a) Prepare the journal entries to record these transactions on the books of Hans Olaf Co. using a periodic inventory system.

(b) Assume that Hans Olaf Co. paid the balance due to D. DeVito Company on May 4 instead of April 15. Prepare the journal entry to record this payment.
Prepare cost of goods sold section.
\((503)\)
Prepare an income statement. (SO 4)
Determine the correct inventory amount. (SO I)