Purchased merchandise from Arotek Company tor $5,300 under credit terms of 1/10,

Question

Purchased merchandise from Arotek Company tor $5,300 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1 At Arotek's request Sheng paid $350 cash for freight charges on the August 1 purchase, reducing the amount owed to Arotek Sold merchandise to Laidr Corp for $3,710 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $2,649 Purchased merchandise from Waters Corporation for $4,600 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 Paid $280 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 $441 and been sold for $618. 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 $695 Received balance due from Laird Corp for the August 5 sale toss the return on August 10. Paid the amount due Waters Corporation tor the August 8 purchase less the price reduction granted Sold merchandise to Tux Co fa $3,180 under credit terms of 1/10, n/30, FOB shipping point, invoice dated August 19. The merchandise had cost $2,207 Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Sheng sent Tux a $530 credit memorandum to resolve the issue Received Tux's cash payment tor the amount due from the August 19 sale. Paid Arotek Company the amount due from the August 1 purchase Prepare journal entries to record the above merchandise transactions of Sheng Company, which applies the perpetual inventory system Purchase merchandise from Arotek Company for $5,300.00 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1.

Explanation / Answer

Books of Scheng Company 01-Aug Merchandise Inventory 5300 Accounts Payable-Arotek 5300 (Purchase of merchandise from Arotek Co.-terms 1/10,n/30 FOB Destination Vide Inv dt.Aug 1) 04-Aug Accounts Payable-Arotek 350 Cash 350 (Freight charges on above ) 05-Aug Accounts Receivable-Laird 3710 Sales 3710 (Sales to Laird Corp.-terms2/10,n/60 FOB Destination Vide Inv. Dt. Aug 5) Cost of Goods Sold 2649 Merchandise Inventory 2649 (Cost of the above goods sold) 08-Aug Merchandise Inventory 4600 Accounts Payable-Waters 4600 (Purchase of merchandise from Waters Corpn.-terms 1/10,n/45 FOB Shipping point Vide Inv dt.Aug 8) Merchandise Inventory 240 Accounts Payable-Waters 240 (Shipping charges on above purchase) 09-Aug Merchandise Inventory 280 Cash 280 (Shipping Charges og Aug 5 Sale to Laird) 10-Aug Sales Returns 618 Accounts Receivables-Laird 618 (Sale value of sales returns by Laird) Merchandise Inventory 441 Cost of Goods Sold 441 (Above returned goods restored to inventory) 12-Aug Accounts Payable-Waters 695 Merchandise Inventory 695 (Reduction in price by Waters for goods purchased on 8 Aug) 15-Aug Cash         (3710-618-62) 3030 Sales Discounts2%*(3710-618) 62 Accounts Receivables-Laird 3092 (Full & final settlement by Laird) 18-Aug Accounts Payable-Waters(4600-695) 3905 Cash 3866 Merchandise Inventory- Purchase discount availed(1%*(4600-695) 39 (Full & final settlement to Waters) 19-Aug Accounts Receivable-Tux Co. 3180 Sales 3180 (Sales to Tux Co-terms1/10,n/30 FOB shipping point Vide Inv. Dt. Aug 19) Cost of Goods Sold 2207 Merchandise Inventory 2207 (Cost of the above goods sold) 22-Aug Sales Discounts 530 Accounts Receivable-Tux Co. 530 (Reduction in price to Tux Co. on goods sold as above) 29-Aug Cash         (3180-530-27) 2623 Sales Discounts1%*(3180-530) 27 Accounts Receivables-Laird 2650 (Full & final settlement by Tux Co.) 30-Aug Accounts Payable-Arotek 4950 Cash 4950 (Full & final settlement to Arotek)

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