ransactions for Rockford Corporation. Prepaic J ourchases merchandise from a variety of manufacturers and sells the merchandise to a variety of re- The May 1 balance in Watt's Inventory account was a $70.000 debit. The following transactions oc- eets of Transactions on the Inventory Account-Perpetual System Watt Wholesale Company LO2, 3 ers. All sales are subject to a cash discount (2/10, n/30). Watt uses a perpetual inventory system. curred during May: May 2 Purchased $5.500 of merchandise from Ajax Manufacturing: terms are 1/10, n/30. 4 Paid $200 freight on the May 2 purchase. 12 Paid Ajax for the May 2 purchase. 14 Purchased $4,000 of merchandise from Baker Manufacturing: terms are 2/10, n/45 16 Received a $300 allowance on the May 14 purchase since some of the merchandise was the wrong color. All of the merchandise is salable at regular prices