Prepare journal entries to record the following merchandising transactions of Lowe'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 August 1 in Accounts Payable-Aron. Aug. 1 Purchased merchandise from Aron Company for $5,000 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1. 5 Sold merchandise to Baird Corp. for $3,500 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $2,000. 8 Purchased merchandise from Waters Corporation for $4,000 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8. 9 Paid $170 cash for shipping charges related to the August 5 sale to Baird Corp. 10 Baird returned merchandise from the August 5 sale that had cost Lowe's $500 and was sold for $1,000. The merchandise was restored to inventory. 12 After negotiations with Waters Corporation concerning problems with the purchases on August 8, Lowe's received a price reduction from Waters of $400 off the $4,000 of goods purchased. Lowe's debited accounts payable for $400. 14 At Aron's request, Lowe's paid $310 cash for freight charges on the August 1 purchase, reducing the amount owed (accounts payable) to Aron. 15 Received balance due from Baird Corp. for the August 5 sale less the return on August 10. 18 Paid the amount due Waters Corporation for the August 8 purchase less the price allowance from August 12. 19 Sold merchandise to Tux Co. for $3,000 under credit terms of n/10, FOB shipping point, invoice dated August 19. The merchandise had cost $1,500. 22 Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Lowe's gave a price reduction (allowance) of $500 to Tux, and credited Tux's accounts receivable for that amount. 29 Received Tux's cash payment for the amount due from the August 19 sale less the price allowance from August 22. 30 Paid Aron Company the amount due from the August 1 purchase. A / i i No 1 2 3 4 5 6 7 col 8 9 Date Aug 01 Aug 05 Aug 05 Aug 08 Aug 09 Aug 10 Aug 10 Aug 12 Aug 14 Merchandise inventory Accounts payable-Aron Cost of goods sold Merchandise inventory General Journal Accounts receivable-Baird Sales returns and allowances Merchandise inventory Accounts payable-Waters Delivery expense Cash Sales returns and allowances Accounts payable-Baird Merchandise inventory Cost of goods sold Accounts payable-Waters Merchandise inventory Cash Sales Accounts receivable-Aron Debit 5,000 2,000 3,500 4,000 Credit 5,000 2,000 3,500 4,000 i i i 8 9 10 11 12 13 14 15 16 Aug 12 Aug 14 Aug 15 Aug 18 Aug 19 Aug 19 Aug 22 Aug 29 Aug 30 Accounts payable-Waters Merchandise inventory Cash Sales Accounts receivable-Aron Cash Sales discounts Accounts payable-Waters Merchandise inventory Cash Accounts receivable-Tux Sales Cost of goods sold Merchandise inventory Sales returns and allowances Accounts receivable-Tux Cash Sales discounts Accounts receivable-Tux Accounts payable-Aron Cash
