Accounting for Merchandising Operations Chapter 4 214 Prepare journal entries to record the following merchandising transactions of Lowe's, which uses tke der petual inventory system and the gross method. (Hint: It will heln to identify each receivable and payable. for example, record the purchase on August I in Accounts Payable-Aron.) Problem 4-2A Preparing journal entries for merchandising Purchased merchandise from Aron Company for $7.500 under credit terms of 1/10, n/30. POD destination, invoice dated August 1. activities-perpetual Aug. 1 system Sold merchandise to Baird Corp. for $5,200 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $4,000.cons) Purchased merchandise from Waters Corporation for $5,400 under credit terms of 1/10, n/43. FOB shipping point, invoice dated August 8. Paid $125 cash for shipping charges related to the August 5 sale to Baird Corp. 10 Baird returned merchandise from the August 5 sale that had cost Lowe's $400 and was sold for S600. The merchandise was restored to inventory. Sale d ten cwst of sule P1 P2 Check Ag9. DI Delivery Epere S125 After negotiations with Waters Corporation concerning problems with the purchases on August 8. Lowe's received a credit memorandum from Waters granting a price reduction of $400 off the $5,400 of goods purchased. 14 12 At Aron's request, Lowe's paid $200 cash for freight charges on the August I purchase, reduc- ing the amount owed to Aron. 15 Received balance due from Baird Corp. for the August 5 sale less the return on August 10. 18 Paid the amount due Waters Corporation for the August 8 purchase less the price allowance from August 12. Sold merchandise to Tux Co. for $4,800 under credit terms of n/10, FOB shipping point, in- voice dated August 19. The merchandise had cost $2,400. Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Lowe's sent Tux a $500 credit memorandum toward the $4,800 invoice to re- solve the issue. Aug 18 Cr Casth 54950 19 22 Aug 29 Dr. Casn 29 Received Tux's cash payment for the amount due from the August 19 sale less the price allow- ance from August 22. 30 Paid Aron Company the amount due from the August I purchase. 54.300 A/R Problem 4-3A Valley Company's adjusted trial balance on August 31, 2017, its fiscal year-end, follows. Computing merchandising amounts and formatting income statements Debit Isulation phe discussed in class) sole pe ated Depreciation and Sales