Octagon Wholesalers uses a perpetual inventory system. Refer to the data in E5-2 regarding sales transactions with Stellar Stores and to the additional information below for Octagon.
Mar. 1 Octagon's cost of the merchandise sold to Stellar was $3,960.
3 Octagon's cost of the merchandise returned by Stellar was $440. As the merchandise was not damaged it was returned to Octagon's inventory.
23 Octagon's cost of the merchandise returned by Stellar was $176. As the merchandise was damaged, it was put in the recycling bin.
Instructions
(a) Prepare Octagon Wholesalers' journal entries to record the sale transactions with Stellar. Remember to record the freight and cash receipt transactions as appropriate.
(b) Calculate Octagon's net sales, cost of goods sold, and gross profi t for these sales.