Olaf Distributing Company completed the following merchandising transactions in the

month of April. At the beginning of April, the ledger of Olaf showed Cash of $9,000 and
M. Olaf, Capital of $9,000. April 2 Purchased merchandise on account from Dakota
Supply Co. $6,900, terms 1/10, n/30. 4 Sold merchandise on account $5,500, FOB
destination, terms 1/10, n/30. The cost of the merchandise sold was $4,100. 5 Paid $240
freight on April 4 sale. 6 Received credit from Dakota Supply Co. for merchandise
returned $500. 11 Paid Dakota Supply Co. in full, less discount. 13 Received collections
in full, less discounts, from customers billed on April 4. 14 Purchased merchandise for
cash $3,800. 16 Received refund from supplier for returned goods on cash purchase of
April 14, $500. 18 Purchased merchandise from Skywalker Distributors $4,500, FOB
shipping point, terms 2/10, n/30. 20 Paid freight on April 18 purchase $100. 23 Sold
merchandise for cash $6,400.The merchandise sold had a cost of $5,120. 26 Purchased
merchandise for cash $2,300. 27 Paid Skywalker Distributors in full, less discount. 29
Made refunds to cash customers for defective merchandise $90. The returned
merchandise had a scrap value of $30. 30 Sold merchandise on account $3,700, terms
n/30.The cost of the merchandise sold was $2,800. Olaf Company's chart of accounts
includes the following: No. 101 Cash, No. 112 Accounts Receivable, No. 120
Merchandise Inventory, No. 201 Accounts Payable, No. 301 M. Olaf, Capital, No. 401
Sales, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, No. 505 Cost of
Goods Sold, and No. 644 Freight-out.
(a)
General Journal
Date
Apr. 2

11

J1

Account Titles and Explanation

Merchandise Inventory.........................................
Accounts Payable........................................

Ref.
120
201

Debit
6,900

Accounts Receivable.............................................
Sales..............................................................
Cost of Goods Sold................................................
Merchandise Inventory..............................

112
401
505
120

5,500

Freight-out.............................................................
Cash..............................................................

644
101

240

Accounts Payable..................................................
Merchandise Inventory..............................

201
120

500

Accounts Payable ($6,900 $500).........................

Merchandise Inventory..............................
($6,400 X 1%)
Cash..............................................................

201
120

6,400

101

Credit
6,900

5,500
4,100
4,100

240

500

64
6,336

13

14

16

18

20

Cash
Sales Discounts ($5,500 X 1%).............................
Accounts Receivable...................................

101
414
112

5,445
55

Merchandise Inventory........................................
Cash..............................................................

120
101

3,800

Cash

500

Merchandise Inventory..............................

101
120

Merchandise Inventory........................................
Accounts Payable........................................

120
201

4,500

Merchandise Inventory........................................
Cash..............................................................

120
101

100

General Journal
Date
Apr. 23

26

27

29

30

5,500

3,800

500

4,500

100
J1

Account Titles and Explanation

Cash
Sales..............................................................
Cost of Goods Sold................................................
Merchandise Inventory..............................

Ref.
101
401
505
120

Debit
6,400

Merchandise Inventory........................................
Cash..............................................................

120
101

2,300

Accounts Payable..................................................
Merchandise Inventory..............................
($4,500 X 2%)
Cash..............................................................

201
120

4,500

Sales Returns and Allowances.............................

Cash..............................................................
Merchandise Inventory........................................
Cost of Goods Sold......................................

412
101
120
505

90

Accounts Receivable.............................................
Sales..............................................................
Cost of Goods Sold................................................
Merchandise Inventory..............................

112
401
505
120

3,700

Credit
6,400

5,120
5,120

2,300

90

101

4,410

90
30
30

3,700
2,800
2,800

(b)
Cash

No. 101

Date
Apr.

Explanation
1
5
11
13
14
16
20
23
26
27
29

Balance

Ref.

J1
J1
J1
J1
J1
J1
J1
J1
J1
J1

Debit

Credit
240
6,336

5,445
3,800
500
100
6,400
2,300
4,410
90

Accounts Receivable
Date
Apr.

Explanation
4
13
30

Apr.

Explanation
2
4
6
11
14
16
18
20
23
26
27
29
30

9,000
8,760
2,424
7,869
4,069
4,569
4,469
10,869
8,569
4,159
4,069

No. 112
Ref.

Debit

J1
J1
J1

5,500

Credit

Balance

5,500

5,500
0
3,700

3,700

Merchandise Inventory
Date

Balance

No. 120
Ref.

Debit

J1
J1
J1
J1
J1
J1
J1
J1
J1
J1
J1
J1
J1

6,900

Credit
4,100
500
64

3,800
500
4,500
100
5,120
2,300
90
30
2,800

Balance
6,900
2,800
2,300
2,236
6,036
5,536
10,036
10,136
5,016
7,316
7,226
7,256
4,456

Accounts Payable
Date
Apr.

Explanation
2
6
11
18
27

No. 201
Ref.
J1
J1
J1
J1
J1

Debit

Apr.

Explanation
1

Balance

4,500

No. 311
Ref.

Debit

Explanation
4
23
30

Date

Balance
9,000

Ref.

Debit

J1
J1
J1

Explanation
29

Date

Explanation
13

Ref.

Debit

J1

90

Explanation
4
23
29
30

Balance

5,500
6,400
3,700

5,500
11,900
15,600

Credit

Balance
90

No. 414
Ref.

Debit

J1

55

Cost of Goods Sold

Date

Credit

No. 412

Sales Discounts

Apr.

Credit

Sales Returns and Allowances

Apr.

6,900
6,400
0
4,500
0

No. 401

Date

Apr.

6,900

4,500

Sales
Apr.

Balance

500
6,400

Common Stock
Date

Credit

Credit

Balance
55

No. 505
Ref.

Debit

J1
J1
J1
J1

4,100
5,120

Credit

30
2,800

Balance
4,100
9,220
9,190
11,990

Freight-out
Date
Apr.

(c)

No. 644
Explanation

Ref.

Debit

J1

240

Credit

Balance
240

OLAF DISTRIBUTING COMPANY

Income Statement (Partial)
For the Month Ended April 30, 2008
Sales revenues
Sales.............................................................................................
$15,600
Less: Sales returns and allowances.........................................
Sales discounts.............................................................

$90
55

145
Net sales.......................................................................................
15,455
Cost of goods sold.................................................................................
11,990
Gross profit...........................................................................................
$3,465