Prepare Journal Entries to Record the Following Merchandise Transactions of Martinez

Essay

Prepare journal entries to record the following merchandise transactions of Martinez Excavation Equipment, which applies the perpetual inventory system and the gross method of recording invoices.
$\begin{array}{|l|l|}\hline \text { May 1 } & \begin{array}{l}\text { Purchased merchandise from Kona Company for } \$ 12,700 \text { under credit } \\\text { terms of } 2 / 15, \mathrm{n} / 45, \mathrm{FOB} \text { destination, and invoice dated May } 1 .\end{array} \\\hline 3 & \begin{array}{l}\text { Sold merchandise to Walton for } \$ 8,000 \text { under credit terms of } 1 / 10, \mathrm{n} / 30, \\\text { FOB destination, invoice date May } 3 . \text { The merchandise had cost } \$ 5,000 .\end{array} \\\hline 5 & \begin{array}{l}\text { Returned } \$ 2,000 \text { of the merchandise purchased on May } 1 \text { to Kona } \\\text { Company. }\end{array} \\\hline 6 & \begin{array}{l}\text { Walton returned merchandise from the May } 3 \text { sale that had cost Martinez } \\\$ 625 \text { and had been sold for } \$ 1,000 . \text { The merchandise was restored to } \\\text { inventory. }\end{array} \\\hline 13 & \text { Received the balance due from Walton less the return. } \\\hline 14 & \text { Paid the amount due Kona Company. } \\\hline\end{array}$