The July 31 credit balance in the Sales account of Horton Sales showed it had sold \(\$ 117,000\) of merchandise during the month. The concern began July with a \(\$ 132,100\) merchandise inventory and ended the month with a \(\$ 108,300\) inventory. It had incurred \(\$ 39,000\) of operating expenses during the month, and it had also recorded the following transactions:

July 2 Received merchandise purchased at a \(\$ 12,000\) invoice price, invoice dated June 26 , terms \(2 / 10, \mathrm{n} / 30\).

4 Received a \(\$ 1,200\) credit memorandum (invoice price) for merchandise received on July 2 and returned for credit.

10 Received merchandise purchased at a \(\$ 19,000\) invoice price, invoice dated July 9 , terms \(2 / 10, n / 30\).

14 Received merchandise purchased at an \(\$ 18,000\) invoice price, invoice dated July 12 , terms \(2 / 10, \mathrm{n} / 30\).

July 18 Paid for the merchandise received on July 10, less the discount.
21 Paid for the merchandise received on July 14, less the discount.
26 The invoice received on July 2 had been refiled in error, after the credit memorandum was attached, for payment on this the last day of its credit period, causing the discount to be lost. Paid the invoice.
\section*{Required}
1. Assume the concern records invoices at gross amounts.

(a) Prepare general journal entries to record the transactions.

(b) Prepare a July income statement for the concern.
2. Assume the concern records invoices at net amounts.

(a) Prepare general journal entries to record the transactions.

(b) Prepare a second income statement for the concern under this assumption.