In: Accounting
Prepare journal entries to record the following merchandising
transactions of Lou’s, which uses the perpetual inventory system
and the gross method. Hint: It will help to identify each
receivable and payable; for example, record the purchase on August
1 in Accounts Payable—Aron.
Aug. 1
Purchased merchandise from Aron Company for $7,000 under credit
terms of 1/10, n/30, FOB destination, invoice dated August 1.
5 Sold
merchandise to Baird Corp. for $4,900 under credit terms of 2/10,
n/60, FOB destination, invoice dated August 5. The merchandise had
cost $3,000.
8
Purchased merchandise from Waters Corporation for $6,000 under
credit terms of 1/10, n/45, FOB shipping point, invoice dated
August 8.
9 Paid
$290 cash for shipping charges related to the August 5 sale to
Baird Corp.
10 Baird
returned merchandise from the August 5 sale that had cost Lou’s
$500 and was sold for $1,000. The merchandise was restored to
inventory.
12 After
negotiations with Waters Corporation concerning problems with the
purchases on August 8, Lou’s received a price reduction from Waters
of $600 off the $6,000 of goods purchased. Lou's debited accounts
payable for $600.
14 At
Aron’s request, Lou’s paid $150 cash for freight charges on the
August 1 purchase, reducing the amount owed (accounts payable) to
Aron.
15
Received balance due from Baird Corp. for the August 5 sale less
the return on August 10.
18 Paid
the amount due Waters Corporation for the August 8 purchase less
the price allowance from August 12.
19 Sold
merchandise to Tux Co. for $4,200 under credit terms of n/10, FOB
shipping point, invoice dated August 19. The merchandise had cost
$2,100.
22 Tux
requested a price reduction on the August 19 sale because the
merchandise did not meet specifications. Lou’s gave a price
reduction (allowance) of $700 to Tux, and credited Tux's accounts
receivable for that amount.
29
Received Tux’s cash payment for the amount due from the August 19
sale less the price allowance from August 22.
30 Paid
Aron Company the amount due from the August 1 purchase.
Transaction List
1 Purchased merchandise from Aron Company for $7,000 under credit
terms of 1/10, n/30, FOB destination, invoice dated August 1.
2 Sold merchandise to Baird Corp. for $4,900 under credit terms of
2/10, n/60, FOB destination, invoice dated August 5.
3 Record cost of merchandise sold, $3,000.
4 Purchased merchandise from Waters Corporation for $6,000 under
credit terms of 1/10, n/45, FOB shipping point, invoice dated
August 8.
5 Paid $290 cash for shipping charges related to the August 5 sale
to Baird Corp.
6 Baird returned merchandise from the August 5 sale that was
sold for $1,000.
7 Record the merchandise, cost $500, that was restored to
inventory.
8 After negotiations with Waters Corporation concerning problems
with the purchases on August 8, Lou’s received a price reduction
from Waters of $600 off the $6,000 of goods purchased. Lou's
debited accounts payable for $600.
9 At Aron’s request, Lou’s paid $150 cash for freight charges on
the August 1 purchase, reducing the amount owed (accounts payable)
to Aron.
10 Received balance due from Baird Corp. for the August 5 sale less
the return on August 10.
11 Paid the amount due Waters Corporation for the August 8 purchase
less the price allowance from August 12.
12 Sold merchandise to Tux Co. for $4,200 under credit terms of
n/10, FOB shipping point, invoice dated August 19.
13 Record cost of merchandise sold, $2,100.
14 Tux requested a price reduction on the August 19 sale because
the merchandise did not meet specifications. Lou’s gave a price
reduction (allowance) of $700 to Tux, and credited Tux's accounts
receivable for that amount.
15 Received Tux’s cash payment for the amount due from the August
19 sale less the price allowance from August 22.
16 Paid Aron Company the amount due from the August 1