Prepare the necessary journal entries for stone company

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Reference no: EM13774

Purchased merchandise from Abilene Company for $6,000 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1.

- At Abilene's request, Stone paid $220 cash for freight charges on the August 1 purchase, reducing the amount owed to Abilene.

- Sold merchandise to Lux Corp. for $4,200 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $2,999.

- Purchased merchandise from Welch Corporation for $5,300 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August

- The invoice showed that at Stone's request, Welch paid the $240 shipping charges and added that amount to the bill. (Hint: Discounts are not applied to freight and shipping charges.)

- Paid $130 cash for shipping charges related to the August 5 sale to Lux Corp.

- Lux returned merchandise from the August 5 sale that had cost Stone $500 and been sold for $700. The merchandise was restored to inventory.

- After negotiations with Welch Corporation concerning problems with the merchandise purchased on August 8, Stone received a credit memorandum from Welch granting a price reduction of $800.

- Received balance due from Lux Corp. for the August 5 sale less the return on August 10.

- Paid the amount due Welch Corporation for the August 8 purchase less the price reduction granted.

- Sold merchandise to Trax Co. for $3,600 under credit terms of 1/10, n/30, FOB shipping point, invoice dated August 19. The merchandise had cost $2,498.

- Trax requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Stone sent Trax a $600 credit memorandum to resolve the issue.

- Received Trax's cash payment for the amount due from the August 19 sale.

- Paid Abilene Company the amount due from the August 1 purchase.

1. Prepare the necessary journal entries for Stone Company, which is a merchandising company that uses the perpetual system.1. Evaluate the company's net sales for the year.

2. Determine the company's total cost of merchandise purchased for the year

3. Prepare a multiple-step income statement that includes separate categories for selling expenses and for general and administrative expenses.

4. Prepare a single-step income statement that includes these expense categories: cost of goods sold, general, selling expenses and administrative expenses.

Reference no: EM13774

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