Chapter 5, Problem 2GLP

Prepare journal entries to record the following merchandising transactions of Sheng Company, which applies the perpetual inventory system. (Him: It will help to identify each receivable and payable; for example, record the purchase on August I in Accounts Payable-Arotek.)

Aug. 1 Purchased merchandise from Arotek Company for $7,500 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1.
5 Sold merchandise to Laird 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. The invoice showed that at Sheng's request. Waters paid the $140 shipping charges and added that amount to the bill. (Hint: Discounts are not ap¬plied to freight and shipping charges.)
9	Paid $125 cash for shipping charges related to the August 5 sale to Laird Corp.
10	Laird returned merchandise from the August 5 sale that had cost Sheng $400 and been sold for $600. The merchandise was restored to inventory.
12 	After negotiations with Waters Corporation concerning problems with the merchandise pur¬chased on August 8, Sheng received a credit memorandum from Waters granting a price reduc¬tion of $700.