Prepare journal entries to record the following merchandising transactions of Knight's, which uses the perpetual inventory system. Hint: It will help to identify each receivable and payable: for example, record the purchase on August 1 in Accounts Payable-Wilson Aug. Aug. 1 Purchased merchandise from Wilson Company for $11,700 under credit terms of 1/10, 1/30, FOB destination, invoice dated August 1. Aug. 5 Sold merchandise to Griffin Corp. for $7,300 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $4,400. Aug- 8 Purchased merchandise from Hall Corporation for $6,240 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8 9 Paid $325 cash for shipping charges related to the August 5 sale to Griffin Corp. Aug. 10 Griffin returned merchandise from the August 5 sale that had cost Knight's $100 and was sold for $200. The merchandise was restored to inventory. Aug. 12 After negotiations with Hall Corporation concerning probleris with the purchases on August 8, Knight's received a price reduction from Hall of $900 off the 56,240 of goods purchased. Knight'a's debited accounts payable for $900. Aug. 14 At Wilson request. Knight & paid $300 cash for freight charges on the August 1 purchase, reducing the amount owed (accounts payable) to Wilson. Aug. 15 Received balance due from Griffin Corp. for the August 5 wale less the return on August 10. Aug. 18 Paid the amount due Hall Corporation for the August 8 purchase less the price allowance from August 12. Aug. 19 Sold merchandise to Garcia Co. for $4,200 under credit torns of 1/10. POH shipping point, invoice dated August 19. The merchandise had cost $2,100. Aug. 22 Garcia requested a price reduction on the August 19. ale because the merchandise did not meet specifications. Knight's's gave a price reduction allowance) of $500 to Garcia, and credited Garcia's accounts receivable for that Amount. Aug. 29 Received Garcia's cash payment for the amount due from the August 19 vale less the price allowance from August 22. Aug. 30 Paid Wilson Company the amount due from the August 1 purchase Requirement General Journal General Ledger Trial Balance Schedule of Receivables Schedule of Payables Income Statement Impact on Income For each transaction, indicate the impact each item had on income and the dollar amount of the change in income, if any. Input decreases to net income as negative values. Upon completion, compare the amount of income with the amount reported on the income statement. Impact on Income Increase decrease) to Income Aug. 1) Purchased merchandise from Wilson Company for $11.700 under credit terms of 1/10, 1/30, FOB destination involo dated August 1 40 Impact on income Increase (decrease) to income Aug. 1) Purchased merchandise from Wilson Company for $11.700 under credit terms of 1/10,n/30, FOB destination, invoice dated August 1. Aug. 5) Sold merchandise to Griffin Corp. for $7,300 under credit terms of 2/10, 1/60. FOB destination, invoice dated August 5. Aug. 5) The merchandise sold to Griffin had cost $4,400. Aug. 8) Purchased merchandise from Hall Corporation for $6,240 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8. Aug. 9) Paid $325 cash for shipping charges related to the August 5 sale to Griffin Corp. Aug. 10) Griffin returned merchandise from the August 5 sale that had sold for $200. Aug. 10) The cost of the merchandise returned by Knight's was $100. The merchandise was restored to inventory. Aug. 12) After negotiations with Hall Corporation concerning problems with the purchases on August 8, Knight's received a price reduction from Hall of $900 off the $6,240 of goods purchased. Knight's's debited accounts payable for $900. Aug. 14) At Wilson's request, Knight's paid $300 cash for freight charges on the August 1 purchase, reducing the amount owed (accounts payable) to Wilson. Aug. 15) Received balance due from Griffin Corp. for the August 5 sale less the retum on August 10. Aug. 18) Paid the amount due Hall Corporation for the August 8 purchase less the price allowance from August 12. Aug. 19) Sold merchandise to Garcia Co. for $4,200 under credit terms of n/10, FOB shipping point, invoice dated August 19 Aug. 19) The cost of the merchandise sold merchandise to Aug. 12) After negotiations with Hall Corporation concerning problems with the purchases on August 8, Knight's received a price reduction from Hall of $900 off the $6,240 of goods purchased. Knight's's debited accounts payable for $900. Aug. 14) At Wilson 's request, Knight's paid $300 cash for freight charges on the August 1 purchase, reducing the amount owed (accounts payable) to Wilson. Aug. 15) Received balance due from Griffin Corp. for the August 5 sale less the return on August 10. Aug. 18) Paid the amount due Hall Corporation for the August 8 purchase less the price allowance from August 12. Aug. 19) Sold merchandise to Garcia Co. for $4,200 under credit terms of n/10, FOB shipping point, invoice dated August 19 Aug. 19) The cost of the merchandise sold merchandise to Garcia was $2,100 Aug. 22) Garcia requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Knight's's gave a price reduction (allowance) of $500 to Garcia, and credited Garcia's accounts receivable for that amount. Aug. 29) Received Garcia's cash payment for the amount due from the August 19 sale less the price allowance from August 22 Aug. 30) Paid Wilson Company the amount due from the August 1 purchase. Total income
