Preparing Journal Entries Merchandise Activities.

Problem 4-2A - Preparing journal entries for merchandising activities - Prepare journal entries to record the following merchandising transactions of Lowe'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 A 1 u Purchased merchandise from Aron Company for $5,000 under credit terms of 1/10, 1/30, FOB destination, 9 Involce dated August 1. 5 Sold merchandise to Baird Corp. for $3,500 under credit terms of 2/10,n/60, FOB destination, Involce dated August 5. The merchandise had cost $2,000. 8. Purchased merchandise from Waters Corporation for $4,000 under credit terms of 1/10, 1/45, FOB shipping point, invoice dated August 8. 9 Paid $110 cash for shipping charges related to the August 5 sale to Baird Corp. 1 Baird returned merchandise from the August 5 sale that had cost Lowe's $500 and was sold for $1,000. The 0 merchandise was restored to inventory 1 After negotiations with Waters Corporation concerning problems with the purchases on August 8, Lowe's 2 received a price reduction from Waters of $400 off the $4,000 of goods purchased. Lowe's debited accounts payable for $400. 1 Al Aron's request, Lowe's paid $320 cash for freight charges on the August 1 purchase, reducing the amount 4 owed (accounts payable) to Aron. 1 Received balance due from Baird Corp. for the August 5 sale less the return on August 10. Paid the amount due Waters Corporation for the August 8 purchase less the price allowance from August 12. 1 Sold merchandise to Tux Co, for $3,000 under credit terms of n/10, FOB shipping point, invoice dated August 19. The merchandise had cost $1,500. 2 Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications 2 Lowe's gave a price reduction (allowance) of $500 to Tux and credited Tux's accounts receivable for that 5 1 8 9 amount 2 Received Tux's cash payment for the amount due from the August 19 sale less the price allowance from August 9 22 3 0 Pald Aron Company the amount due from the August 1 purchase