Selected transactions for Theatre Productions follow. Theatre Productions uses a perpetual inventory system.
May 8 Sold merchandise costing $5,980 to Grande Theatre for $13,000, terms 2/10, n/30.
10 Grande returned $1,000 of the merchandise. This merchandise had originally cost Theatre
$460 and was returned to inventory.
18 Grande paid Theatre the amount owing.
19 Sold merchandise costing $3,600 to Summer Productions for $6,000, terms 1/10, n/30.
20 Summer Productions returned $500 of the merchandise because it was damaged. The merchandise had originally cost Theatre Productions $300. Theatre Productions scrapped the merchandise.
July 19 Added interest charges for one month to the amount owing by Summer Productions.
Theatre charges 15% on outstanding receivables.
22 Summer Productions paid the amount owing.
Instructions
(a) For each of these transactions, indicate if the transaction has increased (+) or decreased (-) cash, accounts receivable, inventory, and owner's equity and by how much. If the item is not changed, write NE to indicate there is no effect. Use the following format, in which the first one has been done for you as an example.

(b) Prepare journal entries to record the above transactions.

Transcribed Image Text:

Transaction Da Cash Accounts Receivable Inventory Owner's Equity +$13,000 May 8 NE -$5,980 +$7,020