Paradine Corp., which uses a perpetual inventory system, charges $8\%$ interest on the balance due

if not paid within the payment terms. It has an estimated return rate of $13\%,$ and sells

merchandise on account to two customers.

The first customer is Vertigo Inc. to whom Paradine sold $$1,500$ worth of merchandise on

August $1,$ terms $\frac{n}{30}.$ The goods had cost Paradine $$900.$ On October $1$ Vertigo paid the entire

balance due.

The second customer is Notorious Limited to whom Paradine sold $$2,500$ worth of merchandise

on August $2,$ terms n$/30.$ The goods had cost Paradine $$1,500.$ On August $6,$ Notorious returned

merchandise worth $$500$ to Paradine. This merchandise had a cost of $$300$ and there was nothing

wrong with the merchandise. On August $11,$ Paradine received payment from Notorious for the

balance due.

Instructions

Assuming that Paradine Corp. prepares adjusting entries on a monthly basis, prepare the

appropriate journal entries.