70.2K

Verified Solution

Link Copied!

2 16 pints Prepare journal entries to record the following merchandising transactions of Lowe s which uses the perpetual inventory system and the gross method August 1 Purchased merchandise from Aron Company for 10 000 under credit terms of 1 10 n 30 FOB destination invoice dated August 1 August 5 Sold merchandise to Baird Corporation for 7 000 under credit terms of 2 10 n 60 FOB destination invoice dated August 5 The merchandise had cost 5 000 August 8 Purchased merchandise from Waters Corporation for 9 000 under credit terms of 1 10 n 45 FOB shipping point invoice dated August 8 Paid 170 cash for shipping charges related to the August 5 sale to Baird Corporation August 9 August 10 Baird returned merchandise from the August 5 sale that had cost Lowe s 500 and was sold for 1 000 The merchandise was restored to inventory August 12 After negotiations with Waters Corporation concerning problems with the purchases on August 8 Lowe s received a price reduction from Waters of 900 off the 9 000 of goods purchased Lowe s debited accounts payable for 900 August 14 At Aron s request Lowe s paid 130 cash for freight charges on the August 1 purchase reducing the amount owed accounts payable to Aron August 15 Received balance due from Baird Corporation for the August 5 sale less the return on August 10 August 18 August 19 Paid the amount due Waters Corporation for the August 8 purchase less the price allowance from August 12 Sold merchandise to Tux Company for 6 000 under credit terms of n 10 FOB shipping point invoice dated August 19 The merchandise had cost 3 000 August 22 Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications Lowe s gave a price reduction allowance of 1 000 to Tux and credited Tux s accounts receivable for that amount August 29 Received Tux s cash payment for the amount due from the August 19 sale less the price allowance from August 22 August 30 Paid Aron Company the amount due from the August 1 purchase Return to question

Answer & Explanation Solved by verified expert

See Answer