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 $9, 68e under credit terms of 1/10, n/3e, FOB destination, invoice dated August 5 Sold merchandise to Baird Corp. for $6,398 under credit terms of 2/12, n/68, FOB destination, invoice dated August 5. The merchandise had cost $4,08e. 8 Purchased merchandise from Waters Corporation for $8,080 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8. 9 Paid $228 cash for shipping charges related to the August 5 sale to Baird Corp. 18 Baird returned merchandise from the August 5 sale that had cost Lowe's $500 and was sold for $1,600. The merchandise was restored to inventory. 12 After negotiations with Waters Corporation concerning problems with the purchases on August 8, Lowe's received a credit memorandum from Waters granting a price reduction of $880 off the $8,698 of goods purchased. 14 At Aron's request, Lowe's paid $110 cash for freight charges on the August 1 purchase, reducing the amount owed 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 & purchase less the price allowance from August 12. 19 Sold merchandise to Tux Co. for $5,400 under credit terms of n/10, FOB shipping point, invoice dated August 19. The merchandise had cost $2,780. 22 Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Lowe's sent Tux a $900 credit memorandum toward the $5,400 invoice to resolve the issue. 29 Received Tux's cash payment for the amount due from the August 19 sale less the price allowance from August 22. 38 Paid Aron Company the amount due from the August 1 purchase. Answer is complete but not entirely correct. No Credit Date Aug 01 General Journal Marchandise inventory Accounts payable-Aron Debit 9,000 9,000 Aug 05 6,300 Accounts receivable-Baird Sales 6,300 Aug 05 Cast of apods sold 4,000 Merchandise inventory 4,000 Aug 08 8.000 Merchandise inventory Accounts payableWaters 8,000 Aug 09 Delivery expense 220 Cash Aug 10 1.000 Sales returns and allowances Accounts receivable-Baird 1,000 Aug 10 500 Merchandise inventory Cost of goods sold 500 Aug 12 800 Accounts payable-Waters | Merchandise inventory Aug 12 8000 Accounts payableWaters Merchandise inventory 800 0 Aug 14 110 Accounts payable-Aron Accounts Cash 110 101 Aug 15 Cash Sales discounts Accounts receivable-Baird 5 , 000 500 [5,500& Aug 18 8,000 0 Accounts payableWaters Cash Sales discounts 7,2008 8008 121 Aug 19 5,400/ Accounts receivable-Tux Sales 5,4000 13 Aug 19 2,700 Cost of goods sold Merchandise inventory 2,700 0 141 Aug 22 _ 900 0 Sales returns and allowances Accounts receivable-Tux _900 Aug 29 4,5000 Cash Accounts receivable-Tux 4500 16 Aug 30_ 8,5308 Accounts payable-Aron Cash __8,530 *
