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 $6,000 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1. 5 Sold merchandise to Baird Corp. for $4,200 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $3,000. 8 Purchased merchandise from Waters Corporation for $5,000 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8. 9 Paid $220 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 $500 off the $5,000 of goods purchased. Lowe's debited accounts payable for $500. 14 At Aron's request, Lowe's paid $230 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 $3,600 under credit terms of n/10, FOB shipping point, invoice dated August 19. The merchandise had cost $1,800. 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 $600 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. Journal entry worksheet Received balance due from Baird Corp. for the August 5 sale less the return on August 10. Note: Enter debits before credits. Date General Journal Credit Aug 15 Cash Debit 3,920 801 Sales discounts I Accounts receivableBaird 4,000 Record entry Clear entry View general journal Journal entry worksheet Paid the amount due Waters Corporation for the August 8 purchase less the price allowance from August 12. Note: Enter debits before credits. Date General Journal Credit Aug 18 Accounts payableWaters Merchandise inventory Cash Debit 4,410/ 90 . 4,500 Record entry Clear entry View general journal Journal entry worksheet Received Tux's cash payment for the amount due from the August 19 sale less the price allowance from August 22. Note: Enter debits before credits. Credit Date Aug 29 General Journal Cash Accounts receivableTux Debit 2,400 2.400 Record entry Clear entry View general journal Journal entry worksheet 7 14 15 Paid Aron Company the amount due from the August 1 purchase. Note: Enter debits before credits. Credit Date Aug 30 General Journal Accounts payableAron Cash Debit 5,800 I 5,800 Record entry Clear entry View general journal
