Problem # 4 (10 points (a) Karns Company purchased merchandise on account from Bailey Office Suppliers for $87,000, with terms of 2/10, n/30 (b) During the discount period, Karns returned some $7,000 worth of merchandise to Bailey (c) Kams Company sold $10,000 of merchandise to customers on account that costs $2,000 (d) Karns paid Bailey Office Supplies in full during the discount period. Kams uses a perpetual inventory system. Prepare the journal entries that Karns Company made to record: (a) the purchase of merchandise. (b) the return of merchandise (c) the sale of merchandise (d) the payment on account Solution a) b)