Prepare journal entries to record the following merchandising transactions of Thompson's, which uses the perpetual inventory system and the gross method. (Hint: It will help to identify each receivable and payable; for example, record the purchase on July 1 in Accounts Payable- Knight) July 1 Purchased merchandise from Knight Company for $11,600 under credit terms of 1/15, n/30, FOB shipping point, invoice dated July 1. July 2 Sold merchandise to Taylor Company for $3,700 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $2,220. July 3 Paid $1,245 cash for freight charges on the purchase of July 1. July 8 Sold merchandise that had cost $4,400 for $7,300 cash. July 9 Purchased merchandise from Parker Company for $5,000 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9. July 11 Returned $1,000 of merchandise purchased on July 9 from Parker Company and debited its account payable for that amount. July 12 Received the balance due from Taylor Company for the invoice dated July 2, net of the discount. July 16 Paid the balance due to Knight Company within the discount period. July 19 Sold merchandise that cost $4,800 to Perry Company for $6,800 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19. July 21 Gave a price reduction (allowance) of $1,400 to Perry Company for merchandise sold on July 19 and credited Perry's accounts receivable for that amount. July 24 Paid Parker Company the balance due, net of discount. July 30 Received the balance due from Perry Company for the invoice dated July 19, net of discount. July 31 Sold merchandise that cost $7,600 to Taylor Company for $12,600 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31. Impact on income Increase (decrease) to income July 1) Purchased merchandise from Knight Company for $11,600 under credit terms of 1/15, 1/30, FOB shipping point, No impact on income invoice dated July 1. July 2) Sold merchandise to Taylor Company for $3,700 under credit terms of 2/10, n/60, FOB shipping point, invoice Increases net income dated July 2. July 2) The cost of the merchandise sold to Taylor Company Decreases net income was $2,220. July 3) Paid $1,245 cash for freight charges on the purchase No impact on income of July 1. 0 July 8) Sold merchandise for $7,300 cash. Increases net income 0 0 0 July 8) The cost of the merchandise sold was $4,400. Decreases net income July 9) Purchased merchandise from Parker Company for $5,000 under credit terms of 2/15, n/60, FOB destination, No impact on income invoice dated July 9. July 11) Received a $1,000 credit memorandum from Parker Company for the return of part of the merchandise No impact on income purchased on July 9. July 12) Received the balance due from Taylor Company for Decreases net income the invoice dated July 2, net of the discount. July 16) Paid the balance due to Knight Company within the discount period. No impact on income July 19) Sold merchandise to Perry Company for $6,800 under credit terms of 2/15, n/60, FOB shipping point, invoice Increases net income dated July 19. July 19) The cost of the merchandise sold to Perry Company Decreases net income was $4,800. July 21) Issued a $1,400 credit memorandum to Perry Decreases net income Company for an allowance on goods sold on July 19. July 24) Paid Parker Company the balance due, net of discount No impact on income July 30) Received the balance due from Perry Company for Decreases net income the invoice dated July 19, net of discount. July 31) Sold merchandise to Taylor Company for $12,600 under credit terms of 2/10, n/60, FOB shipping point, invoice Increases net income dated July 31. July 31) The cost of the merchandise sold to Taylor Decreases net income Company was $7,600. 0