On July 2, 2018, Lake Company sold to Sue Black merchandise having a sales price of

$9,000 (cost $5,400) with terms of 2/10. n/30. f.o.b. shipping point. Lake estimates that

merchandise with a sales value of $900 will be returned. An invoice totaling $120, terms n/30,

was received by Black on July 6 from Pacific Delivery Service for the freight cost. Upon receipt

of the goods, on July 3, Black notified Lake that $350 of merchandise contained flaws. The

same day, Lake issued a credit memo covering the defective merchandise and asked that it be

returned at Lake's expense. Lake estimates the returned items to have a fair value of $140. The

freight on the returned merchandise was $20 paid by Lake on July 7. On July 12, the company

received a check for the balance due from Black.

Instructions

(a) Prepare journal entries for Lake Company to record all the events noted above assuming

sales and receivables are entered at gross selling price.

(b) Prepare the journal entry assuming that Sue Black did not remit payment until August 5.