Chapter 5, Problem 2BPSB

Prepare journal entries to record the following merchandising transactions of Mason Company, which applies the perpetual inventory system. (Hint: It will help to identify each receivable and payable; for example, record the purchase on July 3 in Accounts Payable—OLB.)

July 3 Purchased merchandise from OLB Corp, for SI5.000 under credit terms of 1/10, n/30, FOB destination, invoice dated July 3.
7 Sold merchandise to Brill Co. for $11.500 under credit terms of 2/10, n/60. FOB destination, invoice dated July 7. The merchandise had cost $7.750.
10	Purchased merchandise from Rupert Corporation for $14,200 under credit terms of 1/10, n/45, FOB shipping point, invoice dated July 10. The invoice showed that at Mason's request, Rupert paid the $500 shipping charges and added that amount to the bill. (Hint: Discounts are not applied to freight and shipping charges.)
11	Paid $300 cash for shipping charges related to the July 7 sale to Brill Co.
12	Brill returned merchandise from the July 7 sale that had cost Mason $1,450 and been sold for $1,850. The merchandise was restored to inventory.
14	After negotiations with Rupert Corporation concerning problems with the merchandise purchased on July 10, Mason received a credit memorandum from Rupert granting a price reduction of $2,000.
15	At OLB's request. Mason paid S150 cash for freight charges on the July 3 purchase, reducing the amount owed to OLB.
17 	Received balance due from Brill Co. for the July 7 sale less the return on July 12.
20	Paid the amount due Rupert Corporation for the July 10 purchase less the price reduction granted.
21	Sold merchandise to Brown for $11,000 under credit terms of 1/10, n/30, FOB shipping point invoice dated July 21. The merchandise had cost $7,000.
24	Brown requested a price reduction on the July 21 sale because the merchandise did not meet specifications. Mason sent Brown a credit memorandum for $1,300 to resolve the issue.
30	Received Brown’s cash payment for the amount due from the July 21 sale.
31	Paid OLB Corp, the amount due from the July 3 purchase.