The following transactions for Best Deal Tire, Co. occurred during May:
May 4 Purchased $5,400 of merchandise on account from Bargain Tire, terms 3/15, n/45, FOB shipping point. Bargain Tire prepaid the $125 shipping cost and added the amount to the invoice.
7 Purchased $375 of supplies on account from Office Maxx, terms 3/10, n/30, FOB destination.
9 Sold $950 (cost, $250) of merchandise on account to W. Furmick, terms 3/15, n/45, FOB destination.
11 Paid $25 freight charges to deliver goods to W. Furmick.
13 Returned $600 of the merchandise purchased on May 4 and received a credit.
15 Sold $900 (cost, $350) of merchandise to cash customers.
16 Paid for the supplies purchased on May 7.
18 Paid Bargain Tire the amount due from the May 4 purchase in full.
20 W. Furmick returned $175 (cost, $100) of merchandise from the May 9 sale.
22 Purchased $3,900 of inventory. Paid cash.
23 Received payment in full from W. Furmick for the May 9 sale.
Requirements
1. Journalize the transactions on the books of Best Deal Tire, Co. using (1) the perpetual inventory system, and (2) the periodic inventory system.
2. What was Best Deal Tire’s gross profit for the month of May?