Question

Prepare journal entries to record the following merchandising transactions of Cabela’s, which applies 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 $6,400 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 $533.

3 Paid $105 cash for freight charges on the purchase of July 1.

8 Sold merchandise that had cost $1,700 for $2,100 cash.

9 Purchased merchandise from Leight Co. for $2,900 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9.

11 Received a $900 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 $1,000 to Art Co. for $1,500 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19.

21 Issued a $250 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 $5,200 to Creek Co. for $7,300 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31.

Answer 1

Journal entry :

Date	accounts & explanation	debit	credit
July 1	Merchandise inventory	6400
	Account payable-Boden Company		6400
	(To record merchandise purchase)
July 2	Account receivable-Creek co.	950
	Sals revenue		950
	Cost of goods sold	533
	Merchandise inventory		533
	(To record sales and cost of goods sold)
July 3	Merchandise inventory	105
	Cash		105
	(To record freight paid)
July 8	Cash	2100
	Sales revenue		2100
	Cost of goods sold	1700
	Merchandise inventory		1700
	(TO record sale and cost of goods sold)
July 9	Merchandise inventory a/c	2900
	Account payable-Leight Co.		2900
	(To record merchandise purchase)
July 11	Account payable-Leight Co.	900
	Merchandise inventory		900
	To record return part of merchandise)
July 12	Cash (950*98%)	931
	Sales discount (950*2%)	19
	Account receivable-creek co.		950
	(To recod receive balance)
July 16	Account payable-Boden Co.	6400
	Cash (6400*98%)		6272
	Merchandise inventory (6400*2%)		128
	(To record amount paid)
July 19	Account receivable-Art Co.	1500
	Sales revenue		1500
	Cost of goods sold	1000
	Merchandise inventory		1000
	(To record sale and cost of goods sold)
July 21	Sales allowance	250
	Account receivable-Art co		250
	(TO record sales allowance)
July 24	Account payable-Leight Co.	2900
	Cash (2900*98%)		2842
	Merchandise inventory (2900*2%)		58
	(To record balance paid)
July 30	Cash (1250*98%)	1225
	Sales discount (1250*2%)	25
	Account receivable-Art Co		1250
	(To record amount received)
July 31	Account receivable-Creek co	7300
	Sales revenue		7300
	Cost of goods sold	5200
	Merchandise inventory		5200
	(TO record sale and cost of goods sold)