The following merchandise transactions occurred in December. Both companies use a perpetual inventory system. Dec. 3 Pharoah Company sold merchandise to Sheridan Co. for $37,000, terms 2/10,n/30, FOB destination. This merchandise cost Pharoah Company $18,000. 4 The correct company paid freight charges of $875. 8 Sheridan Co. returned unwanted merchandise to Pharoah. The returned merchandise had a sale price of $2,600 and a cost of $990. It was restored to inventory. 13 Pharoah Company received the balance due from Sheridan Co. (To record credit for goods returned.) (To record cost of goods returned.)