Problem 4-2A Preparing journal entries for merchandising activities-perpetual system LO P1, P2 Aug.1 Purchased merchandise from Arotek Company for $8,200 under credit...

Purchased merchandise from Arotek Company for $8,200 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1.

At Arotek’s request, Sheng paid $340 cash for freight charges on the August 1 purchase, reducing the amount owed to Arotek.

Sold merchandise to Laird Corp. for $5,740 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $4,098.

Purchased merchandise from Waters Corporation for $7,500 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 $240 shipping charges and added that amount to the bill. (Hint: Discounts are not applied to freight and shipping charges.)

Paid $160 cash for shipping charges related to the August 5 sale to Laird Corp.

Laird returned merchandise from the August 5 sale that had cost Sheng $683 and been sold for $957. The merchandise was restored to inventory.

After negotiations with Waters Corporation concerning problems with the merchandise purchased on August 8, Sheng received a credit memorandum from Waters granting a price reduction of $1,133.

Received balance due from Laird Corp. for the August 5 sale less the return on August 10.

Paid the amount due Waters Corporation for the August 8 purchase less the price reduction granted.

Sold merchandise to Tux Co. for $4,920 under credit terms of 1/10, n/30, FOB shipping point, invoice dated August 19. The merchandise had cost $3,414.

Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Sheng sent Tux a $820 credit memorandum to resolve the issue.

Received Tux’s cash payment for the amount due from the August 19 sale.

Paid Arotek Company the amount due from the August 1 purchase.