Sarah Company engaged in the following transactions in July 2010:

July 1 Sold merchandise to Chi Dong on credit, terms n/30, FOB shipping point, $2,100 (cost, $1,260).

3 Purchased merchandise on credit from Angel Company, terms n/30, FOB shipping point, $3,800.

5. Paid Speed Freight for freight charges on merchandise received, $290.

8 Purchased merchandise on credit from Expo Supply Company, terms n/30, FOB shipping point, $3,600, which includes $200 freight costs paid by Expo Supply Company.

12 Returned some of the merchandise purchase on July 3 for credit, $600.

15 Sold merchandise on credit to Tom Kowalski, terms n/30, FOB shipping point, $1,200 (cost, $720).

17 Sold merchandise for cash, $1,000 (cost, $600).

18 Accepted for full credit a return from Chi Dong and returned merchandise to inventory, $200 (cost, $120).

24 Paid Angel Company for purchase of July 3 less return of July 12.

25 Received check from Chi Dong for July 1 purchase less the return on July 18.

Required

1. Prepare entries in journal form to record the transactions, assuming use of the perpetual inventory system. (Use the Review Problem in this chapter as a model.)

2. Most companies call the first line of the income statement net sales. Other companies call in sales. Do you think these terms are equivalent and comparable? What would be the content of net sales? Why might a company use sales instead of net sales?