Problem 4-2A Preparing journal entries for merchandising activities-perpetual system 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. 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 fron Aron Company for $7,000 under credit terns of 1/10, 1/30, Fos destination, Invoice dated August s Sola merchandise to Beira Corp. for $4,9ee under credit terms of 2/10, n/58, Fos destination, Invoice dated August S. The merchandise had cost $3,690. 8 Purchased merchandise from Waters Corporation for $6,000 under credit terms of 1/18, 1/45, FOB shipping point, Envoice dated August 8. 9 Paid $138 cash for shipping charges related to the August 5 sale to Baire Corp. 10 Baird returned merchandise from the August 5 sale that had cost Lowe's 5500 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 $6ee off the $6,000 of goods purchased. Lowe's debited accounts payable for $688. 14 At Aron's request, Lowe's paid 5428 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 laters Corporation for the August 8 purchase less the price allowance from August 12. 19 5018 merchandise to Tux Co. for $4,200 under credit terms of n/10, F08 Shipping point, Invoice dated August 19. The merchandise had cost $2,100. 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 $700 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. No Credit Date Aug 01 General Journal Merchandise inventory Accounts payable-Aron Debit 7,000 1 olo 7,000 2 Aug 05 4,900 Accounts receivable-Baird Sales 4,900 3 Aug 05 3,000 Cost of goods sold Merchandise inventory ol 3,000 4 Aug 08 6,000 Merchandise inventory Accounts payable-Waters SIS 6,000 5 Aug 09 130 Delivery expense Cash 130 SI OS 6 Aug 10 1.000 Sales returns and allowances Accounts receivable-Baird 1,000 7 Aug 10 500 Merchandise inventory Accounts payable-Baird x 500 8 Aug 12 800 Accounts payable Waters Merchandise inventory 600 9 Aug 14 420 > Accounts payableAron Cash Olo 420 10 Aug 15 4.900 Cash Sales discounts Accounts receivable-Baird lolos 90 % 4,802 > 11 Aug 18 Accounts payable-Waters Merchandise inventory Cash OOO 12 Aug 19 Accounts receivable-Tux Sales OO 13 Aug 19 Cost of goods sold Merchandise inventory Blo 14 Aug 22 Sales returns and allowances Accounts receivable-Tux OL 15 Aug 29 Cash Accounts receivable Tux DI >> 16 Aug 30 6,860 Accounts payable-Aron Cash 6,880 X
