Problem 5-2A (Algo) Preparing journal entries for merchandising activities LO P1, P2 Prepare journal entries to record the following merchandising transactions of Lowe's, which uses the perpetual inventory system and the gross method. August 1 Purchased merchandise from Aron Company for $4,000 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1 August 5 Sold merchandise to Baird Corporation for $2.800 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $2,000. August 8 Purchased merchandise from Waters Corporation for $3.000 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8. August 9 Paid $220 cash for shipping charges related to the August 5 sale to Baird Corporation. August 10 Baird returned merchandise from the August 5 sale that had cost Lowe's $500 and was sold for $1.000. The merchandise was restored to inventory. August 12 After negotiations with Waters Corporation concerning problems with the purchases on August 8, Lowe' s received a price reduction from Waters of $300 off the $3,000 of goods purchased. Lowe's debited accounts payable for $300. August 14 At Aron's request, Lowe's paid $220 cash for freight charges on the August 1 purchase, reducing the amount owed (accounts payable) to Aron. August 15 Received balance due from Baird Corporation for the August 5 sale less the return on August 10. August 18 Paid the amount due Waters Corporation for the August 8 purchase less the price allowance from August 12. August 19 Sold merchandise to Tux Company for $2.400 under credit terms of n/10, FOB shipping point, invoice dated August 19. The merchandise had cost $1,200 August 22 Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Lowe' s gave a price reduction (allowance) of $400 to Tux and credited Tux's accounts receivable for that amount. August 29 Received Tux' s cash payment for the amount due from the August 19 sale less the price allowance from August 22. August 30 Paid Aron Company the amount due from the August 1 purchase. View transaction list Journal entry worksheet Purchased merchandise from Aron Company for $4,000 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1. Note: Enter debits before credits. General Journal Debit Credit Date Aug 01 Record entry Clear entry View general journal Required information Use the following information for the Problems below. [The following information applies to the questions displayed below.) Valley Company's adjusted account balances from its general ledger on August 31, its fiscal year-end, follows. It categorizes the following accounts as selling expenses: sales salaries expense, rent expense-selling space, store supplies expense, and advertising expense. It categorizes the remaining expenses as general and administrative. Credit Debit $ 40,000 160.000 $ 46,200 131,567 8.000 273,600 Adjusted Account Balances Merchandise inventory (ending) Other (non-inventory) assets Total liabilities K. Valley, Capital K. Valley, Withdrawals Sales Sales discounts Sales returns and allowances Cost of goods sold Sales salaries expense Rent expense-Selling space Store supplies expense Advertising pense Office salaries expense Rent expense-Office space Office supplies expense Totals 4,186 18.058 105,665 37,483 12.859 3,283 23,256 34,200 3,283 1,094 $ 451,367 $ 451,367 Beginning merchandise inventory was $32,280. Supplementary records of merchandising activities for the year ended August 31 reveal the following itemized costs. Invoice cost of merchandise purchases Purchases discounts received Purchases returns and allowances Costs of transportation-in $ 117,600 2.470 5,645 3,900 Problem 5-3A (Algo) Computing merchandising amounts and formatting income statements LO C1, P4 Required: 1. Compute the company's net sales for the year. 2. Compute the company's total cost of merchandise purchased for the year. 3. Prepare a multiple-step income statement that includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses. 4. Prepare a single-step income statement that includes these expense categories: cost of goods sold, selling expenses, and general and administrative expenses. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute the company's net sales for the year. Net Sales Sales Net sales Required 1 Required 2 > Required 1 Required 2 Required 3 Required 4 Compute the company's total cost of merchandise purchased for the year. Cost of Merchandise Purchased Invoice cost of merchandise purchased Purchases discounts received Purchases returns and allowances Costs of transportation-in Total cost of merchandise purchased Required 1 Required 2 Required 3 Required 4 Prepare a multiple-step income statement that includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses. VALLEY COMPANY Income Statement For Year Ended August 31 Expenses Selling expenses Total selling expenses General and administrative expenses Total general and administrative expenses Total expenses Required 1 Required 2 Required 3 Required 4 Prepare a single-step income statement that includes these expense categories: cost of goods sold, selling expenses, and general and administrative expenses. VALLEY COMPANY Income Statement For Year Ended August 31 Expenses Total expenses