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Prepare journal entries to record the following merchandising transactions of Lowe's, which uses the perpetual inventory system and the gross method.

Prepare journal entries to record the following merchandising transactions of Lowe's, which uses the perpetual inventory system and the gross method.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Prepare journal entries to record the following merchandising transactions of Lowe's, which uses the perpetual inventory system and the gross method. August 1 Purchased merchandise from Aron Company for $5,000 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1. August 5 Sold merchandise to Baird Corporation for $3,500 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $2,000. August 8 Purchased merchandise from Waters Corporation for $4,000 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8. August 9 Paid $150 cash for shipping charges related to the August 5 sale to Baird Corporation. August 10 Baird returned merchandise from the August 5 sale that had cost Lowe's $500 and was sold for $1,000. The merchandise was restored to inventory. August 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 $4,000 of goods purchased. Lowe's debited accounts payable for $400. August 14 At Aron's request, Lowe's paid $150 cash for freight charges on the August 1 purchase, reducing the amount owed (accounts payable) to Aron. August 15 Received balance due from Baird Corporation for the August 5 sale less the return on August 10. August 18 Paid the amount due Waters Corporation for the August 8 purchase less the price allowance from August 12. August 19 Sold merchandise to Tux Company for $3,000 under credit terms of n/10, FOB shipping point, invoice dated August 19. The merchandise had cost $1,500. August 22 Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Lowe's gave a price reduction (allowance) of $500 to Tux and credited Tux's accounts receivable for that amount. August 29 Received Tux's cash payment for the amoun due from the August 19 sale less the price allowance from August 22. August 30 Paid Aron Company the amount due from the August 1 purchase. View transaction list
Transcribed Image Text:Prepare journal entries to record the following merchandising transactions of Lowe's, which uses the perpetual inventory system and the gross method. August 1 Purchased merchandise from Aron Company for $5,000 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1. August 5 Sold merchandise to Baird Corporation for $3,500 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $2,000. August 8 Purchased merchandise from Waters Corporation for $4,000 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8. August 9 Paid $150 cash for shipping charges related to the August 5 sale to Baird Corporation. August 10 Baird returned merchandise from the August 5 sale that had cost Lowe's $500 and was sold for $1,000. The merchandise was restored to inventory. August 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 $4,000 of goods purchased. Lowe's debited accounts payable for $400. August 14 At Aron's request, Lowe's paid $150 cash for freight charges on the August 1 purchase, reducing the amount owed (accounts payable) to Aron. August 15 Received balance due from Baird Corporation for the August 5 sale less the return on August 10. August 18 Paid the amount due Waters Corporation for the August 8 purchase less the price allowance from August 12. August 19 Sold merchandise to Tux Company for $3,000 under credit terms of n/10, FOB shipping point, invoice dated August 19. The merchandise had cost $1,500. August 22 Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Lowe's gave a price reduction (allowance) of $500 to Tux and credited Tux's accounts receivable for that amount. August 29 Received Tux's cash payment for the amoun due from the August 19 sale less the price allowance from August 22. August 30 Paid Aron Company the amount due from the August 1 purchase. View transaction list
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