The transactions listed below are typical of those involving New Books Inc. and Readers$$ Corner. New Books is a wholesale merchandiser and Readers$$ Corner is a retail merchandiser. Assume all sales of merchandise from New Books to Readers$$ Corner are made with terms $2/10,$ n$/30,$ and that the two companies use perpetual inventory systems. Assume the following transactions between the two companies occurred in the order listed during the year ended August $31.$

New Books sold merchandise to Readers$$ Corner at a selling price of $$550,000.$ The merchandise cost New Books $$415,000.$

Two days later, Readers$$ Corner complained to New Books that some of the merchandise differed from what Readers$$ Corner had ordered. New Books agreed to give an allowance of $$10,000$ to Readers$$ Corner.

Just three days later, Readers$$ Corner paid New Books, which settled all amounts owed.

Required:

$1.$ For each of the events $($a$)$ through $($c$),$ indicate the amount and direction of the effect on New Books in terms of the following items. $($Enter any decreases to account balances with a minus sign.$)$

$2.$ Which of the below items are likely to be reported on New Books$$ external financial statements, and which items will be combined behind the scenes?

$3.$ Prepare the journal entries to record New Books transactions. $($If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.$)$