Presented here are selected transactions for Pharoah Inc. during August of the current year. Pharoah uses a perpetual inventory system. It estimates a return rate of 10%, based on past experience. Aug. 1 Purchased supplies for $2,200 cash. 3 Purchased inventory on account from Kenliwa Corp. at a cost of $40,000, terms 2/20, n/45, FOB shipping point. 4 Freight charges of $1,300 were paid by the appropriate party on the August 3 inventory purchase. 6 Sold goods costing $13,400 to Penkwa Limited for $33,500 on account, terms n/30, FOB destination. 7 Freight charges of $700 were paid by the appropriate party on the August 6 sale of inventory. 9 Returned damaged goods costing $3,000 that were originally purchased from Kenliwa on September 3. Received a credit on account. 10 Purchased equipment on account for $53,500, terms n/45, FOB destination. Freight charges of $750 were paid by the appropriate party on the August 10 purchase of equipment. 11 13 Purchased inventory for $4,200 cash. 15 Received the balance due from Penkwa. 22222223 26 27 Paid Kenliwa the balance due. Sold inventory costing $17,000 to Makoons Inc. for $34,000 on account, terms n/45, FOB shipping point. Freight charges of $900 were paid by the appropriate party on the August 26 sale of inventory. 30 Makoons returned goods sold for $1,400 that cost $500. The merchandise was restored to inventory. Date Account Titles and Explanation Debit Aug. 1 Aug. 3 Aug. 4 Aug. 6 Aug. 7 Aug. 9 Aug. 10 Aug. 11 Aug. 13 Aug. 15 Aug. 22 Aug. 26 Aug. 27 Aug. 30 (To record sale of merchandise on account) (To record cost of goods sold) in the problem Credit (To record cost of goods sold) (To record sale of merchandise on account) (To record cost of goods sold) (To record return of merchandise) (To record return of merchandise, assuming goods are resaleable and returned to inventory)