Prepare journal entries to record the following merchandising transactions of Menards, which applies the perpetual inventory system and gross method. (Hint: It will help to identify each receivable and payable; for example, record the purchase on July 3 in Accounts Payable—OLB.)
July 3 Purchased merchandise from OLB Corp. for \(15,000 under credit terms of 1∕10, n∕30, FOB destination, invoice dated July 3.
7 Sold merchandise to Brill Co. for \)11,500 under credit terms of 2∕10, n∕60, FOB destination, invoice dated July 7. The merchandise had cost \(7,750.
10 Purchased merchandise from Rupert Co. for \)14,200 under credit terms of 1∕10, n∕45, FOB shipping point, invoice dated July 10.
11 Paid \(300 cash for shipping charges related to the July 7 sale to Brill Co.
12 Brill returned merchandise from the July 7 sale that had cost Menards \)1,450 and been sold for \(2,000. The merchandise was restored to inventory.
14 After negotiations with Rupert Co. concerning problems with the merchandise purchased on July 10, Menards received a credit memorandum from Rupert granting a price reduction of \)1,200.
15 At OLB’s request, Menards paid \(200 cash for freight charges on the July 3 purchase, reducing the amount owed to OLB.
17 Received balance due from Brill Co. for the July 7 sale less the return on July 12.
20 Paid the amount due Rupert Co. for the July 10 purchase less the price reduction granted on July 14.
21 Sold merchandise to Brown for \)11,000 under credit terms of 1∕10, n∕30, FOB shipping point, invoice dated July 21. The merchandise had cost \(7,000.
24 Brown requested a price reduction on the July 21 sale because the merchandise did not meet specifications. Menards sent Brown a credit memorandum for \)1,000 toward the $11,000 invoice to resolve the issue.
30 Received Brown’s cash payment for the amount due from the July 21 sale less the price allowance from July 24.
31 Paid OLB Corp. the amount due from the July 3 purchase.
