Prepare journal entries to record the following merchandising transactions of Sheng company, which applies the perpetual inventory system. (hint: It will help to identify each receivable and payable; for example, record the purchase on august 1 in accounts payable-Arotek)
Aug 1 purchased merchandise from arotek company for 7500 under credit terms of 1/10, n/30, FOB destination, invoice dated aug 1
Aug 4 at arotek request, Sheng paid $200 cash for freight charges on the aug 1 purchase, reducing the amount owed to Abilene
Aug 5 sold merchandise to laird corp for 5200 under credit terms 2/10, n/60 FOB destination invoice dated aug 5. The merchandise had cost 4000
Aug 8 purchased merchandise from waters corporation for 5400 under credit terms of 1/10, n/45, FOB shipping point, invoice dated aug 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 applied to freight and shipping charges)
Aug 9 paid 125 cash for shipping charges related to the aug 5 sale to laird corp.
Aug 10 Laird return merchandise from the aug 5 sale that had cost sheng 400 and been sold for 600. The merchandise was restored to inventory.
Aug 12 after negotiations with waters corporation concerning problems with the merchandise purchased on aug 8, sheng received a credit memorandum from waters granting a price reduction of 700
Aug 15 received balance due from laird corp for the aug 5 sale less the return on aug 10
Aug 18 paid the amount due waters corporation for the aug 8 purchase less the price reduction granted
Aug 19 sold merchandise to tux co. for 4800 under credit terms of 1/10, n/30, FOB shipping point, invoice dated aug 19 the merchandise cost 2400
Aug 22 tux requested a price reduction on the aug 19 sale because the merchandise did not met specifications. Sheng sent tux a 500 credit memorandum to resolve the issue.
Aug 29 received tux’s cash payment for the amount due from the aug 19 sale
Aug 30 paid arotek company the amount due from the aug 1 purchase.