Prepare journal entries to record the following merchandising transactions of Lowe's, which uses the perpetual inventory system and the gross method. August 1 Purchased merchandise from Aron Company for $7,500 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1. August 5 Sold merchandise to Baird Corporation for $5,200 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $4,000. August 8 Purchased merchandise from Waters Corporation for $5,400 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8. August 9 Paid $125 cash for shipping charges related to the August 5 sale to Baird Corporation. August 10 Baird returned merchandise from the August 5 sale that had cost Lowe's $400 and was sold for $600. The merchandise was restored to inventory. August 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 $5,400 of goods purchased. Lowe's debited accounts payable for $400. August 14 At Aron's request, Lowe's paid $200 cash for freight charges on the August 1 purchase, reducing the amount owed (accounts payable) to Aron. August 15 Received balance due from Baird Corporation for the August 5 sale less the return on August 10. August 18 Paid the amount due Waters Corporation for the August 8 purchase less the price allowance from August 12. August 19 Sold merchandise to Tux Company for $4,800 under credit terms of n/10, FOB shipping point, invoice dated August 19. The merchandise had cost $2,400. amount. August 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 August 29 Received Tux's cash payment for the amount due from the August 19 sale less the price allowance from August August 30 Paid Aron Company the amount due from the August 1 purchase. 22. Answer is complete but not entirely correct. No Date General Journal 1 Aug 01 Merchandise inventory Accounts payable-Aron 2 Aug 05 Accounts receivable-Baird Sales Debit Credit 7,500 7,500 5,200 5,200 3 Aug 05 Cost of goods sold 4,000 Merchandise inventory 4,000 4 Aug 08 Merchandise inventory 5,400 Accounts payable-Waters 5,400 5 Aug 09 Delivery expense Cash 125 125 ( 6 Aug 10 Sales returns and allowances 600 Accounts receivable-Baird 600 7 Aug 10 Merchandise inventory Cost of goods sold 400 400 8 Aug 12 Accounts payable-Waters 400 Merchandise inventory 400 6 9 Aug 14 Accounts payable-Aron Cash 10 Aug 15 11 Aug 18 12 Aug 19 13 Aug 19 14 Aug 22 15 Aug 29 16 Aug 30 Cash Sales discounts Accounts receivable-Baird Accounts payable-Waters Merchandise inventory Cash Accounts receivable-Tux Sales Cost of goods sold Merchandise inventory Sales returns and allowances Accounts receivable-Tux Cash Accounts receivable-Tux Accounts payable-Aron Cash 00 000 200- 4,508 92 200 4,600 5,400 50 4,950 4,800 4,800 2,400 2,400 500 4,300 4,300 500 4,300 4,300