Arotek Company - Expert Answers

Arotek Company - Expert Answers

Aug. 1 Purchased merchandise from Arotek Company for $9,000 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1.

4 At Arotek's request, Sheng paid $360 cash for freight charges on the August 1 purchase, reducing

the amount owed to Arotek.

5 Sold merchandise to Laird Corp. for 56,300 under credit terms of 2110, n/60, FOB destination, invoice dated August 5. The merchandise had cost $4,498.

8 Purchased merchandise from w aters Corporation for 58,300 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.)

9 Paid $160 cash for shipping charges related ~o the August 5 sale to Lux Corp.

10 Laird returned merchandise from the August 5 sale that had cost Sheng S750 and been sold for $1,050. The merchandise was restored to inventory.

12 Alter negotiations v.;tll Waters Corporation concerning problems with the merchandise purchased on August 8, Sheng received a credit memorandum from Waters granting a price reduction of S 1,253.

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

18 Paid tile amount due to Waters Corporation for the August 8 purchase less the price reduction


19 Sold merchandise to Tux Co. for $5,400 under credit terms of 1/10, n/30, FOB shipping point, invoice dated August 19. The merchandise had cost $3,748.

22 Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Sheng sent Tux a $900 credit memorandum to resolve the issue.

29 Received Tux's cash payment for the amount due from the August 19 sate.

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

Prepare journal entries to record the above merchandising transactions of Sheng Company, which applies the perpetual inventory system
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