Question: Prepare journal entries to record the following merchandising transactions of Wave Company, which applies the perpetual inventory system.
(Hint: It will help to identify each receivable and payable; for example, record the purchase on July 3 in Accounts Payable-CAP.)
July 3 Purchased merchandise from CAP Corp. for $15,000 under credit terms of 1y10, ny30, FOB destination, invoice dated July 3.
4 At CAP's request, Wave paid $250 cash for freight charges on the July 3 purchase, reducing the amount owed to CAP.
7 Sold merchandise to Morris Co. for $10,500 under credit terms of 2y10, ny60, FOB destination, invoice dated July 7. The merchandise had cost $7,500.
10 Purchased merchandise from Murdock Corporation for $14,200 under credit terms of 1y10, ny45, FOB shipping point, invoice dated July 10.
The invoice showed that at Wave's request, Murdock paid the $600 shipping charges and added that amount to the bill. (Hint: Discounts are not applied to freight and shipping charges.)
11 Paid $300 cash for shipping charges related to the July 7 sale to Morris Co.
12 Morris returned merchandise from the July 7 sale that had cost Wave $1,250 and been sold for $1,750. The merchandise was restored to inventory.
14 After negotiations with Murdock Corporation concerning problems with the merchandise purchased on July 10, Wave received a credit memorandum from Murdock granting a price reduction of $2,000.
17 Received balance due from Morris Co. for the July 7 sale less the return on July 12.
20 Paid the amount due Murdock Corporation for the July 10 purchase less the price reduction granted.
21 Sold merchandise to Ulsh for $9,000 under credit terms of 1y10, ny30, FOB shipping point, invoice dated July 21. The merchandise had cost $6,250.
24 Ulsh requested a price reduction on the July 21 sale because the merchandise did not meet specifications. Wave sent Ulsh a credit memorandum for $1,500 to resolve the issue.
30 Received Ulsh's cash payment for the amount due from the July 21 sale.
31 Paid CAP Corp. the amount due from the July 3 purchase.