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 $6,800 under credit terms of 2/15, n/30, FOB shipping point, invoice dated July 1.
		2		Sold merchandise to Creek Co. for $950 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $567.
		3		Paid $140 cash for freight charges on the purchase of July 1.
		8		Sold merchandise that had cost $2,100 for $2,500 cash.
		9		Purchased merchandise from Leight Co. for $2,300 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9.
		11		Returned $300 of merchandise purchased on July 9 from Leight Co. and debited its account payable for that amount.
		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 $1,000 to Art Co. for $1,500 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19.
		21		Gave a price reduction (allowance) of $250 to Art Co. for merchandise sold on July 19 and credited Art's accounts receivable for that amount.
		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 $5,600 to Creek Co. for $7,100 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31.

Answer 1

Answer
Date	Accounts Titles	Debit	Credit
Jul-01	Merchandise Inventory	$     6,800
	Accounts Payable - Boden Company		$     6,800
Jul-02	Accounts Receivable - Creek Co.	$        950
	Sales Revenue		$        950
Jul-02	Cost of goods sold	$        567
	Merchandise Inventory		$        567
Jul-03	Merchandise Inventory	$        140
	Cash		$        140
Jul-08	Cash	$     2,500
	Sales Revenue		$     2,500
Jul-08	Cost of goods sold	$     2,100
	Merchandise Inventory		$     2,100
Jul-09	Merchandise Inventory	$     2,300
	Accounts Payable - Leight Co.		$     2,300
Jul-11	Accounts Payable - Leight Co.	$        300
	Merchandise Inventory		$        300
Jul-12	Cash ($950 x 0.98)	$        931
	Sales Discount ($950 x 0.02)	$          19
	Accounts Receivable - Creek Co.		$        950
Jul-16	Accounts Payable - Boden Company	$     6,800
	Cash ($6,800 x 0.98)		$     6,664
	Merchandise Inventory ($6,000 x 0.01)		$        136
Jul-19	Accounts Receivable - Art Co.	$     1,500
	Sales Revenue		$     1,500
Jul-19	Cost of goods sold	$     1,000
	Merchandise Inventory		$     1,000
Jul-21	Sales return and allowance	$        250
	Accounts Receivable - Art Co.		$        250
Jul-24	Accounts Payable - Leight Co.	$     2,500
	Cash ($2,500 x 0.98)		$     2,450
	Merchandise Inventory ($2,500 x 0.02)		$          50
Jul-30	Cash ($1,250 x 0.98)	$     1,225
	Sales Discount ($1,250 x 0.02)	$          25
	Accounts Receivable - Art Co.		$     1,250
Jul-31	Accounts Receivable - Creek Co.	$     7,100
	Sales Revenue		$     7,100
Jul-31	Cost of goods sold	$     5,600
	Merchandise Inventory		$     5,600