Prepare Journal Entries to Record the Following Merchandising Transactions of Margin

Essay

Prepare journal entries to record the following merchandising transactions of Margin Company, which applies the perpetual inventory system and the gross method of recording invoices. Margin Company offers all of its credit customers credit terms of 2/10, n/30.
$\begin{array}{|l|l|}\hline \text { May 1 } & \begin{array}{l}\text { Purchased merchandise from Craft Company for } \$ 7,800 \text { under credit terms } \\\text { of } 1 / 10, \mathrm{n} / 30, \mathrm{FOB} \text { shipping point, invoice dated May } 1 .\end{array} \\\hline \text { May 2 } & \begin{array}{l}\text { Purchased merchandise from Bow Company for } \$ 10,600 \text { under credit } \\\text { terms 2/05, n/20, FOB destination. }\end{array} \\\hline \text { May 3 } & \begin{array}{l}\text { Sold merchandise to Sting Company for } \$ 5,600, \mathrm{FOB} \text { shipping point, } \\\text { invoice dated May 4. The merchandise had cost } \$ 3,000 .\end{array} \\\hline \text { May 4 } & \begin{array}{l}\text { Paid } \$ 300 \text { cash for the freight charges on the May 1 purchase of } \\\text { merchan dise. }\end{array} \\\hline \text { May 5 } & \begin{array}{l}\text { Received an } \$ 800 \text { credit memorandum from Craft Company for the return } \\\text { of part of the merchandise purchased on May 1. }\end{array} \\\hline \text { May 8 } & \begin{array}{l}\text { Said Bow Company the balance due within the discount period. } \\\text { invoice dated May } 8 . \text { The merchandise had a cost of } \$ 1,500 .\end{array} \\\hline \text { May 11 } & \text { Paid Craft Company the balance due within the discount period. } \\\hline \text { May 13 } & \text { Received the balance due from Sting Company within the discount period. } \\\hline \text { May 14 } & \begin{array}{l}\text { Issued a credit } \$ 300 \text { credit memorandum to Skeet Company for an } \\\text { allowance on defective merchandise. }\end{array} \\\hline \text { May 17 } & \text { Received the balance due from Skeet Company within the discount period. } \\\hline\end{array}$