Presented below are two independent situations. Assume each company uses a periodic inventory system.
1. On January 6, Bow Co. sells merchandise on account to Pryor Company for $7,000, terms 2/10, n/30. On January 16, Pryor Company pays the amount due.
2. On January 10, D. Laskowski purchases $9,000 of merchandise from Paltrow Co., terms 2/10, n/30. D. Laskowski returns $600 of merchandise to Paltrow on January 15. Paltrow Co. charges its customers 1% per month on overdue amounts. On March 10, Paltrow records interest on D. Laskowski's past due account. On March 31, D. Laskowski pays his account in full.
Instructions
(a) Foritem1, prepare the entries on January 6 and January 16 on Bow Co.s books.
(b) For item 2, prepare the entries required on January 10, January 15, March 10, and March 31 on Paltrow Company's books.