BE5-3 Prepare the journal entries to record the following transactions on Monroe Company’s books using a perpetual inventory system.

(a) On March 2, Monroe Company sold $900,000 of merchandise to Churchill Company, terms 2/10, n/30. The cost of the merchandise sold was $620,000.

(b) On March 6, Churchill Company returned $120,000 of the merchandise purchased on March 2 because it was defective. The cost of the returned merchandise was $90,000.

(c) On March 12, Monroe Company received the balance due from Churchill Company.