Olaf Corp. uses a perpetual inventory system. The company had the following inventory transactions in April: April 3 Purchased merchandise from Martinez Ltd. for $27,500, terms 1/10, n/30, FOB shipping point. The appropriate company paid freight costs of $720 on the merchandise purchased on April 3. 6 Purchased supplies on account for $5,150 7 Returned damaged merchandise to Martinez and was given a purchase allowance of $3,800. The merchandise was repaired by Martinez and returned to inventory for future resale. Paid the amount due to Martinez in full 8 3 The cost of the merchandise sold on April 3 was $17,220 1 The cost of the merchandise returned on April 8 was $2,100. 2. Martinez uses a perpetual inventory system 3. Apr. 3 Accounts Receivable 27500 Cash 27500 (To record credit sale) 3 17220 X 17220 (To record cost of merchandise sold) 6 720 720 X 7 5150 5150 8 3800 3800 (To record return of goods) 2100 2100 (To record cost of merchandise returned)