Response to the following problem:
Prepare journal entries to record the following merchandising transactions of Stone 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-Abilene.)
Aug. 1 Purchased merchandise from Abilene Company for $6,000 under credit terms of 1y10, ny30, FOB destination, invoice dated August 1.
4 At Abilene's request, Stone paid $100 cash for freight charges on the August 1 purchase, reducing the amount owed to Abilene.
5 Sold merchandise to Lux Corp. for $4,200 under credit terms of 2y10, ny60, FOB destination, invoice dated August 5. The merchandise had cost $3,000.
8 Purchased merchandise from Welch Corporation for $5,300 under credit terms of 1y10, ny45, FOB shipping point, invoice dated August 8. The invoice showed that at Stone's request, Welch paid the $240 shipping charges and added that amount to the bill.
(Hint: Discounts are not applied to freight and shipping charges.)
9 Paid $120 cash for shipping charges related to the August 5 sale to Lux Corp.
10 Lux returned merchandise from the August 5 sale that had cost Stone $500 and been sold for $700. The merchandise was restored to inventory.
12 After negotiations with Welch Corporation concerning problems with the merchandise purchased on August 8, Stone received a credit memorandum from Welch granting a price reduction of $800.
15 Received balance due from Lux Corp. for the August 5 sale less the return on August 10.
18 Paid the amount due Welch Corporation for the August 8 purchase less the price reduction granted.
19 Sold merchandise to Trax Co. for $3,600 under credit terms of 1y10, ny30, FOB shipping point, invoice dated August 19. The merchandise had cost $2,500.
22 Trax requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Stone sent Trax a $600 credit memorandum to resolve the issue.
29 Received Trax's cash payment for the amount due from the August 19 sale.
30 Paid Abilene Company the amount due from the August 1 purchase.