Please help me with the \"income statement\" and \"Impact on income\". For \"imp

ID: 2342066 • Letter: P

Question

Please help me with the "income statement" and "Impact on income".

For "impact on income" I just need the one for Aug. 15

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 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 Aug. 8 Purchased merchandise from Waters Corporation for $5,40 under credit terms of 1/10, n/45, FOB shipping point, invoice merchandise had cost $4,000 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

Explanation / Answer

Analysis of transaction on august 15

Sales to baird on Aug 5

5200

Less: merchandise returned on Aug 10

-600

Net sale to baird on credit term of 2/10, n/60

4600

Less: sales discount allowance (4600*2%)

Cash received from baird

4692

Impact

Decrease net income

Sales discount allowances is expense, which reduce the net income.

-92

We can check your work, all transactions are correctly solved.

Lowe's company

Income statement

For the month ended August 31, 2017

Sales (5200+4800)

10000

Less: sales return

600

Less: sales allowances and discount (92+500)

592

1192

Net sales

8808

Cost of goods sold (4000-400+2400)

6000

Gross profit

2808

Operating expense

Shipping charge

125

Net income

2683