Question

The following information applies to the questions displayed below.]

The trial balance for Terry’s Auto Shop as of January 1, Year 2, follows:

Account Titles	Debit			Credit
Cash	$	14,760
Inventory		3,170
Common Stock				$	7,310
Retained Earnings					10,620
Total	$	17,930		$	17,930

The following events affected the company during the Year 2 accounting period:

Purchased merchandise on account that cost $4,140.

The goods in Event 1 were purchased FOB shipping point with freight cost of $215 cash.

Returned $405 of damaged merchandise for credit on account.

Agreed to keep other damaged merchandise for which the company received an $250 allowance.

Sold merchandise that cost $2,630 for $13,000 cash.

Delivered merchandise to customers in Event 5 under terms FOB destination with freight costs amounting to $150 cash.

Paid $2,840 on the merchandise purchased in Event 1.

Paid $8,600 cash for operating expenses.

b. Open general ledger T-accounts with the appropriate beginning balances, and post the journal entries to the T-accounts.

Answer 1

Cash					Inventory
Beg. Bal.	14760				Beg. Bal.	3170
5	13000	215	2		1	4140	405	3
		150	6		2	215	250	4
		2840	7				2630	5
		8600	8		End. Bal.	4240
End. Bal.	15955
Accounts Payable					Common Stock
Beg. Bal.		0			Beg. Bal.		7310
3	405	4140	1
4	250				End. Bal.		7310
7	2840
End. Bal.		645
Retained Earnings					Sales Revenue
Beg. Bal.		10620					13000	5
End. Bal.		10620			End. Bal.		13000
Cost of Goods Sold					Freight-Out
5	2630				6	150
End. Bal.	2630				End. Bal.	150
Operating Expenses
8	8600
End. Bal.	8600