Presented below are transactions related to Li Company.

1. On December 3, Li Company sold HK$570,000 of merchandise to South China Co., terms 1/10, n/30, FOB shipping point. The cost of the merchandise sold was HK$364,800.

2. On December 8, South China Co. was granted an allowance of HK$20,000 for merchandise purchased on December 3.

3. On December 13, Li Company received the balance due from South China Co.

Instructions

(a) Prepare the journal entries to record these transactions on the books of Li Company using a perpetual inventory system.

(b) Assume that Li Company received the balance due from South China Co. on January 2 of the following year instead of December 13. Prepare the journal entry to record the receipt of payment on January 2.