PROBLEM 4

Bolton Store uses a PERPETUAL inventory system. Bolton engaged in the following transactions during April:

April 12 Purchased $15,000 in merchandise subject to terms of 2/10, n/30.

April 13 Received a billing from Orange Freight Lines for $300 for the April 12 purchase.

April 15 Returned $1,000 of merchandise from the April 12 purchase.

April 20 Paid balances due from April 12 purchase and April 13 freight.

Required: Show computations.

1. Prepare journal entries to record the above transactions using the gross method.
2. Prepare journal entries to record the above transactions using the net method.