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Complete E5-5 below + the extra requirement described below. E5-5 Journalising purchase and sales transactionsperpetual system [15-20 min] The following transactions occurred during February 2016 for Soul Art Gift Shop. Amounts include GST unless otherwise stated. Feb 3 Purchased $2970 of inventory on credit under terms of 4/10, n/eom (end of month) and FOB delivery point. 7 Returned $440 of defective goods purchased on 3 February. 9 Paid freight bill of $121 on 3 February purchase. 10 Sold inventory on credit for $4785. Payment terms were 2/15, n/30. These goods cost the business $2 300, net of GST. 12 Paid amount owed on credit purchase of 3 February, less the return and the discount. 16 Granted a sales allowance of $550 on the 10 February sale. 23 Received cash from 10 February customer in full settlement of her debt, less the allowance and the discount. Requirement Journalise the February transactions for Soul Art Gift Shop. Explanations aren't required. Extra Requirement: After completing the journal entries above, prepare the Income Statement, for Soul Art Gift Shop, for the month of February 2016. Did they make a profit or loss in February? Include the following operating expenses: Rent Expense $500 Wage Expense $300 Use the format in Exhibit 5-8, page 240, as a guide; EXHIBIT Financial statements of Greg's Tunes (amounts assumed) GREG'S TUNES Income statement for the year ended 31 December 2016 $169 300 $(1 400) (2000) (3 400) $165 900 90 800 75 100 Sales revenue Less: Sales discounts Sales returns and allowances Net sales revenue Cost of sales Gross profit Operating expenses Wage expense Rent expense Insurance expense Depreciation expense Supplies expense Finance expenses Net profit $10 200 8 400 1 000 600 500 1 300 (20 700) (1 300) $ 53 100

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