OnJune 10 Mawmey Company purchased $6,000 of merchandise from Lima Com- _ inventory entries.

pany, terms 3/10, n/30. Mawmey pays the freight costs of $400 on June 11. Damaged (SO 2, 3)

248 Prepare sales revenues section of income statement.

(SO 4)

Prepare an income statement and calculate profitability ratios.

(SO 4, 6)

Compute missing amounts and calculate profitability ratios.

(SO 4, 6)

=e Prepare multiple-step income statement and calculate profitability ratios.

(SO 4, 6)

CHAPTER 5. Merchandising Operations and the Multiple-Step Income Statement goods totaling $500 are returned to Lima for credit on June 12. On June 19 Mawmey Company pays Lima Company in full, less the purchase discount. Both companies use a perpetual inventory system.

Instructions

(a) Prepare separate entries for each transaction on the books of Mawmey Company.

(b) Prepare separate entries for each transaction for Lima Company. The merchandise purchased by Mawmey on June 10 cost Lima $3,000, and the goods returned cost Lima $240.