The following are merchandising transactions of Wave Company, which applies the Periodic inventory system.

July 3 Purchased merchandise from CAP Company for RO. 15,000 under credit terms of 1/10, n/30, FOB destination.

July 4 At CAPs request, Wave paid RO. 250 cash for freight charges on the July 3 purchase, reducing the amount owed to CAP.

July 7 Sold merchandise to Morris Company for RO. 10,500 under credit terms of 2/10, n/60, FOB destination. The merchandise had cost RO. 7,500.

July 10 Purchased merchandise from Dock Corporation for RO. 14,200 under credit terms of 1/10, n/45, FOB shipping point. The invoice showed that at Waves request, Dock paid the RO. 600 shipping charges and added that amount to the bill. (Hint: Discounts are not applied to freight and shipping charges).

July 11 Paid RO. 300 cash for shipping charges related to the July 7 sale to Morris Company.

July 12 Morris returned merchandise from the July 7 sale that had cost Wave RO. 1,250 and been sold for RO. 1,750. The merchandise was restored to inventory.

July 14 After negotiations with Dock Corporation concerning problems with the merchandise purchased on July 10, Wave received a credit memorandum from Dock granting a price reduction of RO. 2,000.

Instructions:

1. Prepare the journal entries to record all the above transactions. (8 Marks)