GL0502 - Based on Problem 5-2A Lowe's Company LO P1, P2 Prepare journal entries to record the following merchandising transactions of Lowe's, which uses the perpetual inventory system. (Hint: It will help to identify each receivable and payable; for example, record the purchase on August 1 in Accounts Payable-Aron.) Aug. 1 Purchased merchandise from Aron Company for $7,500 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1. Aug. 5 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. Aug. 8 Purchased merchandise from Waters Corporation for $5,400 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8. Aug. 9 Paid $125 cash for shipping charges related to the August 5 sale to Baird Corp. Aug. 10 Baird returned merchandise from the August 5 sale that had cost Lowe's $400 and was sold for $600. The merchandise was restored to inventory. Aug. 12 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. Aug. 14 At Aron's request, Lowe's paid $200 cash for freight charges on the August 1 purchase, reducing the amount owed to Aron. Aug. 15 Received balance due from Baird Corp. for the August 5 sale less the return on August 10. Aug. 18 Paid the amount due Waters Corporation for the August 8 purchase less the price allowance from August 12. Aug. 19 Sold merchandise to Tux Co. for $4,800 under credit terms of n/10, FOB shipping point, invoice dated August 19. The merchandise had cost $2,400. Aug. 22 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 resolve the issue. Aug. 29 Received Tux's cash payment for the amount due from the August 19 sale less the price allowance from August 22. Aug. 30 Paid Aron Company the amount due from the August 1 purchase. Requirement General Journal General Ledger Trial Balance Schedule of Receivables Schedule of Payables Income Statement Impact on Income Journalize the merchandising transactions. The General Ledger, trial balance, and schedules of accounts receivable and payable will be updated based on your entries. View transaction list View journal entry worksheet NO Date Credit Account Title Merchandise inventory Accounts payable - Aron Debit 7,500 Aug 01 7,500 2 Aug 05 5,200 Accounts receivable - Baird Sales 5,200 3 Aug 05 4,000 Cost of goods sold Merchandise inventory 4,000 4 Aug 08 5,400 Merchandise inventory Sales 5,400 Aug 09 125 Aug 10 600 600 Requirement General Journal General Ledger Trial Balance Schedule of Receivables Schedule of Payables Income Statement Impact on Income Dates: Jul 01 to: Aug 30 Lowe's Company Schedule of Accounts Receivable Accounts receivable - Aron Accounts receivable - Baird Accounts receivable - Tux Accounts receivable - Waters Total accounts receivable $ 5,200 Requirement General Journal General Ledger Trial Balance Schedule of Receivables Schedule of Payables Income Statement Impact on Income Prepare a multiple-step income statement through the calculation of gross profit. Lowe's Company Income Statement For the Month Ended August 31, 2017 Operating expenses: Net income Income No impact on income Aug. 1) Purchased merchandise from Aron Company for $7,500 under credit terms of 1/10. n/30, FOB destination, invoice dated August 1. Aug. 5) Sold merchandise to Baird Corp. for $5,200 under credit terms of 2/10, 1/60, FOB destination, invoice dated August 5 Aug. 5) The merchandise sold to Baird had cost $4,000. increases net income S 5,200 Decreases net income Aug. 8) Purchased merchandise from Waters Corporation for $5,400 under credit terms of 1/10. n/45, FOB shipping point, invoice dated August No impact on income Aug. 9) Paid $125 cash for shipping charges related to the Decreases net income August 5 sale to Baird Corp. Aug. 10) Baird returned merchandise from the August 5 Sale Decreases net income that had sold for $600. Aug. 10) The cost of the merchandise returned by Lowe's was $400. The merchandise was restored to inventory. Increases net income No impact on income Aug. 12) After negotiations with Waters Corporation concerning problems with the purchases on August B. Lowe's received a credit memorandum from Waters granting a price reduction of $400 off the $5,400 of goods purchased Aug. 14) At Aron's request, Lowe's paid $200 cash for freight charges on the August 1 purchase, reducing the amount owed to Aron, Aug. 15) Received balance due from Baird Corp. for the August 5 sale less the return on August 10. Decreases net income Aug. 18) Paid the amount due Waters Corporation for the August 8 purchase less the price allowance from August 12 No impact on income Aug, 19) Sold merchandise to Tux Co. for $4,800 under credit terms of n/10, FOB shipping point, invoice dated Increases net income August 19 Aug. 19) The cost of the merchandise sold merchandise to Tux was $2,400. Decreases net income Aug. 22) 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 Decreases net income $4,800 invoice to resolve the issue. Aug. 29) Received Tux's cash payment for the amount due from the August 19 sale less the price allowance from August No impact on income 22 No impact on income Aug. 30) Paid Aron Company the amount due from the August 1 purchase. Total income