Question

D Prepare journal entries to record the following merchandising transactions of Lowe'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 Company for $7,500 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1. 5 Sold merchandise to Baird Corp. for $5,200 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $4,000. 8 Purchased merchandise from Waters Corporation for $5,400 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8. 9 Paid $125 cash for shipping charges related to the August 5 sale to Baird Corp. Check Aug. 9, Dr. Delivery Expense, $125 10 Baird returned merchandise from the August 5 sale that had cost Lowe's $400 and was sold for $600. The merchandise was restored to inventory. 12 After negotiations with Waters Corporation concerning problems with the purchases on August 8, Lowe's received a price reduction from Waters of $400 off the $5,400 of goods purchased. Lowe's debited accounts payable for $400. 14 At Aron's request, Lowe's paid $200 cash for freight charges on the August 1 purchase, reducing the amount owed (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 Waters Corporation for the August 8 purchase less the price allowance from August 12. Aug. 18, Cr. Cash, $4,950 19 Sold merchandise to Tux Co. for $4,800 under credit terms of n/10, FOB shipping point, invoice dated August 19. The merchandise had cost $2,400.

Answer 1

Date	Particulars	Debit (in $)	Credit (in $)
Aug 1	Merchandise Inventory	7500
	Accounts Payable- Aron		7500
Aug 5	Accounts Receivble- Baird	5200
	Sales		5200
	Cost of goods sold	1200
	Merchandise inventory		1200
Aug 8	Merchandise Inventory	5400
	Accounts Payable- Waters		5400
Aug 9	Delivery Expense	125
	Cash		125
Aug 10	Sales return	600
	Accounts receivable-Baird		600
	Merchandise Inventory	400
	Cost of goods sold		400
Aug 12	Accounts Payable-Water	400
	Purchase Discount		400
Aug 14	Accounts Payable-Aron	200
	Cash		200
Aug 15	Cash	4600
	Account Receivable-Baird		4600
Aug 18	Account Payable- Water	5400
	Purchase discount		50
	Cash		4950
Aug 19	Accounts Receivable-Tux	4800
	Sales		4800
	Cost of goods sold	2400
	Merchandise Inventory		2400
Aug 22	Sales Discount	500
	Accounts Receivable- Tux		500
Aug 29	Cash	4300
	Accounts Receivable- Tux		4300
Aug 30	Accounts Payable- Aron	7300
	Cash		7300