Problem 4-2A (Algo) Preparing journal entries for merchandising activities LO P1, P2 Prepare journal entries to record the following merchandising transactions of Lowe's, which uses the perpetual inventory system and the gross method. August 1 purchased nerehandine fron Arou Company for 57,000 under eredit terma of 1/10, n/30, roB dentination, invoice dated Aaguet 1. Auguat 5 sold nerchandise to Beird Corporation for $4,900 under credit terma of 2/10, n/60, ros destination, invoice dated August 5 . The merchandise had cost $3,000. August 8 Purchased nerchandise from Waters Corporation tor $6,000 under eredit terns of 1/10, n/45, FoB ahipping point, involee dated August 8 . Augunt 9 Paid $130 eash for shipping eharges related to the August 5 sale to Baird Corporation. Augunt 10 Baird returned merehandiese from the August 5 sale that had cost Lowe's $500 and was sold for $1,000. The merchandise was restored to inventory. Auguat 12 After negotiations with Katers Corporation concerning problems with the purchanes on Auguat 6 , Lowg' a price reduction from Waters of $600 off the $6,000 of goods parehased. Lowe'n dobited accounts payable 10 r $600. Auguat 14 At Aron's request, Lowe's paid $300 ensh for freight charges on the August 1 purchase, reducing the anount owed (accounts payable) to Aron. Auguat 15 Received balance due fron Daird Corporation for the August 5 sale less the return on August 10 . August 18 Paid the amount due Wateri Corporation for the August 8 parehase less the price allowance from Auguat 12 . August 19 sold nerchandise to Rux Cospany for $4,200 ander credit terns of n/10, Fos ahipping point, invoice dated August 19. The nerchandise had coat $2,100. Auguet 22 Tux requested a price reduction on the August 19 sale because the nerchandise did not meet specifications. Lowe' a gave a price reduction (allowance) of $700 to fux and credited Tux's accounta receivable for that amount, August 29 Received Tux's casb payeent for the amount due from the August 19 wale leas the price allowance from Auguat 22. August 30 Paid Aron Company the anount due fron the August 1 purchase