On June 10, Novak Company purchased $7,400 of merchandise on account from Monty Company, FOB shipping point, terms 3/10, n/30. Novak pays the freight costs of $560 on June 11. Goods totaling $600 are returned to Monty for credit on June 12. On June 19, Novak pays Monty Company in full, less the discount. Both companies use a perpetual inventory system.

(a) Your answer is correct Prepare separate entries for each transaction on the books of Novak Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter o for the amounts. Record journal entries in the order presented in the problem.) Debit Credit Date June 10 Account Titles and Explanation Inventory 7400 Accounts Payable 7400 June 11 Inventory 560 Cash 560 June 12 Accounts Payable 600 Inventory 600 June 19 Accounts Payable 6800 Inventory 204 Cash 6596 (b) Prepare separate entries for each transaction for Monty Company. The merchandise purchased by Novak on June 10 cost Monty $5,400, and the goods returned cost Monty $254. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Record journal entries in the order presented in the problem.) Debit Credit Date June 10 Account Titles and Explanation Accounts Receivable Inventory (To record credit sale) Cost of Goods Sold June 10 Inventory (To record cost of merchandise sold) Inventory June 11 Cost of Goods Sold June 12 Cost of Goods Sold June 12 Cash (To record merchandise returned) Accounts Payable Inventory (To record cost of merchandise returned) Accounts Payable June 19 Inventory Cash