2. On June 10, Spinner Company purchased $10,000 of merchandise from Lawrence Company, FOB shipping point, terms 2/10, n/30. Spinner pays the freight costs of $600 on June 11. Damaged goods totaling $700 are returned to Lawrence for credit on June 12. The fair value of these goods is $300. On June 19, Spinner pays Lawrence in full, less the purchase discount. Both companies use a perpetual inventory system. Required: A. Prepare separate entries for each transaction on the books of Spinner Company. June 10: Merchandise Inventory 10,000 Accounts Payable 10,000 June 11: Freight Expense 600 Cash 600 June 12: Accounts Payable 700 Merchandise Inventory 300 Loss on Damaged Goods 400 June 19: Accounts Payable 9,700 Purchase Discounts 200 Cash 9,500 B. Prepare separate entries for each transaction for Lawrence Company. June 10: Accounts Receivable 10,000 Sales Revenue 10,000 Cost of Goods Sold 6,400 Merchandise Inventory 6,400 June 12: Sales Returns and Allowances 700 Accounts Receivable 700 June 19: Cash 9,500 Sales Discounts Forfeited 200 Accounts Receivable 9,700 3. The ledger of Nuro Company at the end of the current year shows Accounts Receivable $180,000, Sales Revenue $1,800,000, and Sales Returns and Allowances $60,000. A. If Nuro uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Nuro determines that Willie's $2,900 balance is uncollectible. December 31: Bad Debt Expense 2,900 Accounts Receivable - Willie 2,900 B. If Allowance for Doubtful Accounts has a credit balance of $4,300 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 1% of net sales, and (2) 10% of accounts receivable. December 31: Bad Debt Expense 18,000 (1% of $1,800,000) Allowance for Doubtful Accounts 18,000 December 31: Bad Debt Expense 18,000 (10% of $180,000) Allowance for Doubtful Accounts 18,000 C. If Allowance for Doubtful Accounts has a debit balance of $410 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales and (2) 6% of accounts receivable. December 31: Allowance for Doubtful Accounts 410 Bad Debt Expense 410 December 31: Allowance for Doubtful Accounts 10,800 (6% of $180,000) Bad Debt Expense 10,800