Prepare journal entries to record the following merchandising transactions of
Prepare journal entries to record the following merchandising transactions of Allou Company, which applies the perpetual inventory system. (It will help to identify each receivable and payable; for example, record the purchase on July 3 in Accounts Payable—Magar.)
July 3 Purchased merchandise from Magar Corp. for $4,100 under credit terms of 1/10, n/30, FOB destination, invoice dated July 3.
4 At Magar’s request, Allou paid $500 cash for freight charges on the July 3 purchase, reducing the amount owed to Magar.
7 Sold merchandise to Konop Co. for $2,870 under credit terms of 2/10, n/60, FOB destination, invoice dated July 7. The merchandise had cost $2,049.
10 Purchased merchandise from Payak Corporation for $3,400 under credit terms of 1/10, n/45, FOB shipping point, invoice dated July 10. The invoice showed that at Allou’s request, Payak paid the $240 shipping charges and added that amount to the bill.
11 Paid $120 cash for shipping charges related to the July 7 sale to Konop Co.
12 Konop returned merchandise from the July 7 sale that had cost Allou $341 and been sold for $470. The merchandise was restored to inventory.
14 After negotiations with Payak Corporation concerning problems with the merchandise purchased on July 10, Allou received a credit memorandum from Payak granting a price reduction of $500.
17 Received balance due from Konop Co. for the July 7 sale less the return on July 12.
20 Paid the amount due Payak Corporation for the July 10 purchase less the price reduction granted.
21 Sold merchandise to Vescio for $2,460 under credit terms of 110, n30, FOB shipping point, invoice dated July 21. The merchandise had cost $1,707.
24 Vescio requested a price reduction on the July 21 sale because the merchandise did not meet specifications. Allou sent Vescio a credit memorandum for $360 to resolve the issue.
30 Received Vescio’s cash payment for the amount due from the July 21 sale.
31 Paid Magar Corp. the amount due from the July 3 purchase.
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