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 pay- able; for example, record the purchase on July 1 in Accounts Payable—Boden.) July 1 Purchased merchandise from Boden Company for $6,000 under credit terms of 1∕15, n∕30, FOB shipping point, invoice dated July 1. 2 Sold merchandise to Creek Co. for $900 under credit terms of 2∕10, n∕60, FOB shipping point, invoice dated July 2. The merchandise had cost $500. 3 Paid $125 cash for freight charges on the purchase of July 1. 8 Sold merchandise that had cost $1,300 for $1,700 cash. 9 Purchased merchandise from Leight Co. for $2,200 under credit terms of 2∕15, n∕60, FOB destination, invoice dated July 9. 11 Received a $200 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 $100 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 $4,800 to Creek Co. for $7,000 under credit terms of 2∕10, n∕60, FOB shipping point, invoice dated July 31.

Answer 1

Date	General Journal	Debit	Credit
Jul. 1	Merchandise inventory	6000
	Accounts payable-Boden		6000
	(To record merchandise purchased on account)
Jul. 2	Accounts receivable-Creek Co.	900
	Sales revenue		900
	(To record sales on account)
Jul. 2	Cost of goods sold	500
	Merchandise inventory		500
	(To record the cost of sales)
Jul. 3	Merchandise inventory	125
	Cash		125
	(To record freight paid)
Jul. 8	Cash	1700
	Sales revenue		1700
	(To record cash sales)
Jul. 8	Cost of goods sold	1300
	Merchandise inventory		1300
	(To record the cost of sales)
Jul. 9	Merchandise inventory	2200
	Accounts payable-Leight Co.		2200
	(To record merchandise purchased on account)
Jul. 11	Accounts payable-Leight Co.	200
	Merchandise inventory		200
	(To record credit memo for purchase returns)
Jul. 12	Cash	882
	Sales discount (2% x $900)	18
	Accounts receivable-Creek Co.		900
	(To record collection on account)
Jul. 16	Accounts payable-Boden	6000
	Merchandise inventory (1% x $6000)		60
	Cash		5940
	(To record payment on account)
Jul. 19	Accounts receivable-Art Co.	1200
	Sales revenue		1200
	(To record sales on account)
Jul. 19	Cost of goods sold	800
	Merchandise inventory		800
	(To record the cost of sales)
Jul. 21	Sales returns and allowances	100
	Accounts receivable-Art Co.		100
	(To record credit memo for sales allowance)
Jul. 24	Accounts payable-Leight Co. ($2200 - $200)	2000
	Merchandise inventory [2% x ($2200 - $200)]		40
	Cash		1960
	(To record payment on account)
Jul. 30	Cash	1078
	Sales discount [2% x ($1200 - $100)]	22
	Accounts receivable-Art Co. ($1200 - $100)		1100
	(To record collection on account)
Jul. 31	Accounts receivable-Creek Co.	7000
	Sales revenue		7000
	(To record sales on account)
Jul. 31	Cost of goods sold	4800
	Merchandise inventory		4800
	(To record the cost of sales)