Question

Prepare journal entries to record the following merchandising transactions of Cabela’s, which uses the perpetual inventory system and the gross method. (Hint: It will help to identify each receivable and payable; for example, record the purchase on July 1 in Accounts Payable—Boden.) July 1 Purchased merchandise from Boden Company for $6,100 under credit terms of 2/15, n/30, FOB shipping point, invoice dated July 1. 2 Sold merchandise to Creek Co. for $1,000 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $508. 3 Paid $125 cash for freight charges on the purchase of July 1. 8 Sold merchandise that had cost $1,400 for $1,800 cash. 9 Purchased merchandise from Leight Co. for $2,400 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9. 11 Received a $400 credit memorandum from Leight Co. for the return of part of the merchandise purchased on July 9. 12 Received the balance due from Creek Co. for the invoice dated July 2, net of the discount. 16 Paid the balance due to Boden Company within the discount period. 19 Sold merchandise that cost $800 to Art Co. for $1,200 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19. 21 Issued a $200 credit memorandum to Art Co. for an allowance on goods sold on July 19. 24 Paid Leight Co. the balance due, net of discount. 30 Received the balance due from Art Co. for the invoice dated July 19, net of discount. 31 Sold merchandise that cost $4,900 to Creek Co. for $7,300 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31.

Answer 1

Company name
Journal entries
Date	General Journal	Debit	Credit
July 01	Merchandise inventory	$        6,100
	Accounts payable - Boden		$        6,100
	(To record purchase of inventory on account.)
July 02	Accounts receivable - Creek	$        1,000
	Sales revenue		$        1,000
	(To record sales revenue on account.)
July 02	Cost of goods sold	$           508
	Merchandise inventory		$           508
	(To record cost of goods sold.)
July 03	Merchandise inventory	$           125
	Cash		$           125
	(To record Freight charges on the purchase.)
July 08	Cash	$        1,800
	Sales revenue		$        1,800
	(To record sales revenue on cash.)
July 08	Cost of goods sold	$        1,400
	Merchandise inventory		$        1,400
	(To record cost of goods sold.)
July 09	Merchandise inventory	$        2,400
	Accounts payable - Leight		$        2,400
	(To record purchase of inventory on account.)
July 11	Accounts payable - Leight	$           400
	Merchandise inventory		$           400
	(To record received a $400 credit memorandum from Leight Co.)
July 12	Cash (1000-20)	$           980
	Sales discounts (1000*2%)	$              20
	Accounts receivable - Creek		$        1,000
	(To record Received the balance due from Creek Co. for the invoice dated July 2, net of the discount.)
July 16	Accounts payable - Boden	$        6,100
	Merchandise inventory (6100*2%)		$           122
	Cash (6100-122)		$        5,978
	(To record Paid the balance due to Boden Company within the discount period.)
July 19	Accounts receivable - Art	$        1,200
	Sales revenue		$        1,200
	(To record sales revenue on account.)
July 19	Cost of goods sold	$           800
	Merchandise inventory		$           800
	(To record cost of goods sold.)
July 21	Sales returns and allowances	$           200
	Accounts receivable - Art		$           200
	(To record issued a $200 credit memorandum to Art Co. for an allowance on goods sold.)
July 24	Accounts payable - Leight	$        2,000
	Merchandise inventory (2000*2%)		$              40
	Cash (2000-40)		$        1,960
	(To record Paid the balance due to Leight Company within the discount period.) (Net purchase = 2400-400=2000)
July 30	Cash (1000-20)	$           980
	Sales discounts (1000*2%)		$              20
	Accounts receivable - Art		$        1,000
	(To record Received the balance due from Art Co., net of the discount.) (Net sales = 1200-200=1000)
July 31	Accounts receivable - Creek	$        7,300
	Sales revenue		$        7,300
	(To record sales revenue on account.)
July 31	Cost of goods sold	$        4,900
	Merchandise inventory		$        4,900
	(To record cost of goods sold.)