Aug. 1 Purchased merchandise from Abilene Company for $4,800 under credit terms of 1/10, n/30, FOB...

Aug. 1

Purchased merchandise from Abilene Company for $4,800 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1.

At Abilene's request, Stone paid $400 cash for freight charges on the August 1 purchase, reducing the amount owed to Abilene.

Sold merchandise to Lux Corp. for $3,360 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $2,399.

Purchased merchandise from Welch Corporation for $4,100 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8. The invoice showed that at Stone’s request, Welch paid the $240 shipping charges and added that amount to the bill. (Hint: Discounts are not applied to freight and shipping charges.)

Paid $230 cash for shipping charges related to the August 5 sale to Lux Corp.

Lux returned merchandise from the August 5 sale that had cost Stone $400 and been sold for $560. The merchandise was restored to inventory.

After negotiations with Welch Corporation concerning problems with the merchandise purchased on August 8, Stone received a credit memorandum from Welch granting a price reduction of $619.

Received balance due from Lux Corp. for the August 5 sale less the return on August 10.

Paid the amount due to Welch Corporation for the August 8 purchase less the price reduction granted.

Sold merchandise to Trax Co. for $2,880 under credit terms of 1/10, n/30, FOB shipping point, invoice dated August 19. The merchandise had cost $1,999.

Trax requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Stone sent Trax a $480 credit memorandum to resolve the issue.

Received Trax's cash payment for the amount due from the August 19 sale.

Paid Abilene Company the amount due from the August 1 purchase.

Prepare journal entries to record the above merchandising transactions of Stone Company, which applies the perpetual inventory system. (Identify each receivable and payable; for example, record the purchase on August 1 in Accounts Payable—Abilene.) (Round your answer to nearest dollar amount. Omit the "$" sign in your response.)

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Expert Solution

ekkarill92 answered 1 year ago

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