PA6-2 Reporting Sales Transactions between Wholesale and Retail Merchandisers Using Perpetual Inventory Systems (LO 6-4, LO 6-5) The transactions listed below are typical of those involving New Books Inc. and Readers Comer New Books is a wholesale merchandiser and Readers Corner is a retail merchandiser. Assume all sales of merchandise from New Books to Readers Comer are made with terms 3/10, 1/30, and that the two companies use perpetual inventory systems. Assume the following transactions between the two companies occurred in the order listed during the year ended August 31 a New Books sold merchandise to Readers' Comer at a selling price of $605,000. The merchandise cost New Books $437,000 b. Two days toter, Readers Corner complained to New Books that some of the merchandise differed from what Readers Corner had ordered, New Books agreed to give on allowance of $9,000 to Readers Corner c. Just three days toter, Reodora Comer pad New Books, which settled all amounts owed, Required: 1. For each of the events (o through (Indicate the amount and direction of the effect on New Books in terms of the following term (Enter any decreases to account balances with a minus sign) Transaction Sales Discounts Natale Gross Proti Sales Revenues aus Huture and Allows 605,000 0.000 Cost of Goods Sold 437,000 D 005.000 2. Which of the below items are likely to be reported on New Books' external financial statements, and which items will be combined behind the scenes? Sales revenues Sales returns and allowances Sales discounts Net sales Cost of goods sold Gross profit 3. Prepare the journal entries to record New Books transactions, (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 2 3 Record the sales on account of $605,000 to Readers' Corner, Note: Enter debits before credits General Journal Debit Credit Transaction 0(1) Record entry Clear entry View general journal