For each transaction, indicate the impact each item had on income and the dollar amount of the change in income, if any. Input decreases to net income as negative values. Upon completion, compare the amount of income with the amount reported on the income statement. Prepare journal entries to record the following merchandising transactions of Lowe’s, which uses 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—Aron.)
Aug. 1 Purchased merchandise from Aron Company for $7,500 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1.
Aug. 5 Sold merchandise to Baird Corp. for $5,200 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $4,000.
Aug. 8 Purchased merchandise from Waters Corporation for $5,400 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8.
Aug. 9 Paid $125 cash for shipping charges related to the August 5 sale to Baird Corp.
Aug. 10 Baird returned merchandise from the August 5 sale that had cost Lowe’s $400 and was sold for $600. The merchandise was restored to inventory.
Aug. 12 After negotiations with Waters Corporation concerning problems with the purchases on August 8, Lowe’s received a credit memorandum from Waters granting a price reduction of $400 off the $5,400 of goods purchased.
Aug. 14 At Aron’s request, Lowe’s paid $200 cash for freight charges on the August 1 purchase, reducing the amount owed to Aron.
Aug. 15 Received balance due from Baird Corp. for the August 5 sale less the return on August 10.
Aug. 18 Paid the amount due Waters Corporation for the August 8 purchase less the price allowance from August 12.
Aug. 19 Sold merchandise to Tux Co. for $4,800 under credit terms of n/10, FOB shipping point, invoice dated August 19. The merchandise had cost $2,400.
Aug. 22 Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Lowe’s sent Tux a $500 credit memorandum toward the $4,800 invoice to resolve the issue.
Aug. 29 Received Tux’s cash payment for the amount due from the August 19 sale less the price allowance from August 22.
Aug. 30 Paid Aron Company the amount due from the August 1 purchase.

Lowe Company

1. Impact on Income and the Dollar Amount:

Aug. 1 No impact

Aug. 5 +$5,200 - $4,000 = +$1,200

Aug. 8 No impact

Aug. 9 = -$125

Aug. 10 -$600  +$400 = -$200

Aug. 12 None

Aug. 14 None

Aug. 15 -$92

Aug. 18 +$50

Aug. 19 +$4,800 -$2,400 = $2,400

Aug. 22 -$500

Aug. 29 -$43  

Aug. 30 None

Total = +$2,690

2. Journal Entries:

Aug. 1 Debit Inventory $7,500

Credit Accounts Payable (Aron Company) $7,500

Purchase of goods on credit terms of 1/10, n/30, FOB destination, invoice dated August 1.

Aug. 5 Debit Accounts Receivable (Baird Corp.) $5,200

Credit Sales Revenue $5,200

Sale of goods on credit terms of 2/10, n/60, FOB destination, invoice dated August 5.

Debit Cost of goods sold $4,000

Credit Inventory $4,000

Cost of goods sold.

Aug. 8 Debit Inventory $5,400

Credit Accounts Payable (Waters Corporation) $5,400

Purchase of goods on credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8.

Aug. 9 Debit Freight-in $125

Credit Cash $125

Freight-in paid for cash.

Aug. 10 Debit Sales Returns $600

Credit Accounts Receivable (Baird Corp.) $600

Goods returned by a customer.

Debit Inventory $400

Credit Cost of goods sold $400

Cost of returned goods.

Aug. 12 Debit Accounts Payable (Waters Corporation) $400

Credit Inventory $400

Price reduction granted by Waters.

Aug. 14 Debit Accounts Payable (Aron) $200

Credit Cash $200

Part-payment to Aron on account.

Aug. 15 Debit Cash $4,508

Debit Cash Discounts $92

Credit Accounts Receivable (Baird Cop.) $4,600

Cash received on account.

Aug. 18 Debit Accounts Payable (Waters Corporation) $5,000

Credit Cash $4,950

Credit Cash Discounts $50

Cash payment on account.

Aug. 19 Debit Accounts Receivable (Tux Co.) $4,800

Credit Sales Revenue $4,800

Credit sales on terms of n/10, FOB shipping point, invoice dated August 19.

Debit Cost of goods sold $2,400

Credit Inventory $2,400

Cost of goods sold.

Aug. 22 Debit Sales Allowances $500

Credit Accounts Receivable (Tux Co.) $500

Sales allowances granted to Tux Co. on account.

Aug. 29 Debit Cash $4,257

Debit Cash Discounts $43

Credit Accounts Receivable (Tux Co.) $4,300

Aug. 30 Debit Accounts Payable (Aron Company) $7,300

Credit Cash $7,300

Cash payment on account.

Explanation:

a) Data and Analysis:

Aug. 1 Inventory $7,500 Accounts Payable (Aron Company) $7,500

credit terms of 1/10, n/30, FOB destination, invoice dated August 1.

Aug. 5 Accounts Receivable (Baird Corp.) $5,200 Sales Revenue $5,200

credit terms of 2/10, n/60, FOB destination, invoice dated August 5.

Cost of goods sold $4,000 Inventory $4,000

Aug. 8 Inventory $5,400 Accounts Payable (Waters Corporation) $5,400

credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8.

Aug. 9 Freight-in $125 Cash $125

Aug. 10 Sales Returns $600 Accounts Receivable (Baird Corp.) $600

Inventory $400 Cost of goods sold $400

Aug. 12 Accounts Payable (Waters Corporation) $400 Inventory $400

Aug. 14 Accounts Payable (Aron) $200 Cash $200

Aug. 15 Cash $4,508 Cash Discounts $92 Accounts Receivable $4,600

Aug. 18 Accounts Payable (Waters Corporation) $5,000 Cash $4,950 Cash Discounts $50

Aug. 19 Accounts Receivable (Tux Co.) $4,800 Sales Revenue $4,800 credit terms of n/10, FOB shipping point, invoice dated August 19. Cost of goods sold $2,400 Inventory $2,400

Aug. 22 Sales Allowances $500 Accounts Receivable (Tux Co.) $500

Aug. 29 Cash $4,257 Cash Discounts $43 Accounts Receivable $4,300

Aug. 30 Accounts Payable (Aron Company) $7,300 Cash $7,300

account balance book uk

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi