Problem 5-2A Preparing journal entries for merchandising activities-perpetual system LO P1, P2 1. Prepare journal entries to record the following merchandising transactions of Lou'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 from aron Conpany for $6,000 under credit terns of 1/10, 1/30, FOB destination, invoice dated August 5 Sold nerchandise to Baird Corp. for $4,200 under credit terns of 2/10, V60, FOB destination, invoice dated August 5. The nerchandise had cost $3,000. 8 Purchased merchandise from Vaters Corporation for $5,000 under credit terns of 1/10, 145, FOB shipping point, invoice dated August 8. 9 Paid $160 cash for shipping charges related to the August 5 sale to Baird Corp. 10 Baird returned merchandise from the August 5 sale that had cost Lou' . $500 and was sold for $1,000. The merchandise vas restored to inventory. 12 After negotiations with Waters Corporation concerning problens with the purchases on August 8, Lou's received a price reduction fron Waters of $500 off the $5,000 of goods purchased. Lou's debited accounts payable for $500. 14 At Aron's request, Lou's paid $490 cash for freight charges on the August 1 purchase, reducing the amount oved (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 Vaters Corporation for the August 8 purchase less the price allowance from August 12. 19 Sold merchandise to Tux Co. for $3,600 under credit terns of W10, FOB shipping point, invoice dated August 19. The Merchandise had cost $1,800. 22 Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Lou's gave a price reduction (allowance) of $600 to Tux, and credited Tux's accounts receivable for that amount. 29 Received Tux' : 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