Please answer PA6-1

GROUP A PROBLEMS connect ACCOUNTING PA6-1 Reporting Purchase Transactions between Wholesale and Retail Merchandisers Using Perpetual Inventory Systems The transactions listed below are typical of those involving New Books Inc. and Readers' Corner New Books is a wholesale merchandiser and Readers' Corner is a retail merchandiser. Assume all sales of merchandise from New Books to Readers' Corner are made with terms 2/10, n/30, and that ccounting Merchandising Operations and the Multistep Income Statement APTER 6 the two companies use perpetual inventory systems. Assume the following transactions between the two companies occurred in the order listed during the year ended August 31. a. New Books sold merchandise to Readers Corner at a selling price of $550,000. The merchan- dise had cost New Books $415,000 b. Two days later, Readers' Corner complained to New Books that some of the merchandise differed from what Readers' Corner had ordered. New Books agreed to give an allowance of $10,000 to Readers' Corner. c. Just three days later, Readers' Corner paid New Books, which settled all amounts owed. Required: 1. Indicate the effecet (direction and amount) of each transaction on the Inventory balance of 2. Prepare the journal entries that Readers' Corner would record and show any computations Readers' Corner