1 answer

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

Question:

Prepare journal entries to record the following merchandising transactions of Lowes, which uses the perpetual inventory syst
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 $7,000 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1. 5 Sold merchandise to Baird Corp. for $4,900 under credit terms of 2/10, 1/60, POB destination, invoice dated August 5. The merchandise had cost $3,000. # Purchased merchandise from Waters Corporation for $6,000 under credit terms of 1/10, n/45, POB shipping point, invoice dated August 8. 9 Paid $110 cash for shipping charges related to the August 5 sale to Baird Corp. 10 Baird returned merchandise from the August 5 sale that had cost Love's $500 and was sold for $1,000. The merchandise was restored to inventory. 12 After negotiations with Waters Corporation concerning problems with the purchases on August 8, Love's received a credit memorandum from Waters granting a price reduction of $600 off the $6,000 of goods purchased. 14 At Aron's request, Love's paid $490 cash for freight charges on the August I purchase, reducing the amount owed 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. 19 Sold merchandise to Tux Co. for $4,200 under credit terms of n/10, POB shipping point, Invoice dated August 19. The merchandise had coat 52,100. 22 Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Lowe'sont Tux a $700 credit memorandum toward the $4,200 invoice to resolve the issue. 29 Received Tux cash payment for the amount due from the August 19 sale less the price allowance from August 22. 30 Paid Aron Company the amount due from the August I purchase. View transaction list Journal entry worksheet Purchased merchandise from Aron Company for $7,000 under credit terms of 1/10, 1/30, FOB destination, invoice dated August 1.

Answers

Lowe's
Date General Journal Debit Credit Calculation
1-Aug Inventory      7,000
Accounts Payable-Aron       7,000
5-Aug Accounts Receivable-Baird      4,900
Sales       4,900
Cost of goods sold      3,000
Inventory       3,000
8-Aug Inventory      6,000
Accounts Payable-Waters       6,000
9-Aug Delivery Expense          110
Cash           110
10-Aug Sales Returns & Allowances      1,000
Accounts Receivable-Baird       1,000
Inventory          500
Cost of goods sold           500
12-Aug Accounts Payable-Waters          600
Inventory           600
14-Aug Accounts Payable-Aron          490
Cash           490
15-Aug Cash      3,822 2/10, n/60 means 2% cash discount if paid within 10 days or else full invoice amount to be paid within 60 days
Sales discounts            78 =3,900*2%
Accounts Receivable-Baird       3,900 =4,900-1,000
18-Aug Accounts Payable-Waters      5,400 =6,000-600
Cash       5,346
Inventory             54 =5,400*1% 1/10, n/45
19-Aug Accounts Receivable-Tux      4,200
Sales       4,200
Cost of goods sold      2,100
Inventory       2,100
22-Aug Sales Returns & Allowances          700
Accounts Receivable-Tux           700
29-Aug Cash      3,500
Accounts Receivable-Tux       3,500 =4,200-700 n/10
30-Aug Accounts Payable-Aron      6,510 =7,000-490
Cash       6,510
.

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