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 $950 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $508.
		3		Paid $140 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		Returned $400 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 $4,900 to Creek Co. for $7,200 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	6100
	Accounts payable-Boden		6100
	(To record merchandise purchased on account)
Jul. 2	Accounts receivable-Creek Co.	950
	Sales revenue		950
	(To record sales on account)
Jul. 2	Cost of goods sold	508
	Merchandise inventory		508
	(To record the cost of sales)
Jul. 3	Merchandise inventory	140
	Cash		140
	(To record freight paid)
Jul. 8	Cash	1800
	Sales revenue		1800
	(To record cash sales)
Jul. 8	Cost of goods sold	1400
	Merchandise inventory		1400
	(To record the cost of sales)
Jul. 9	Merchandise inventory	2400
	Accounts payable-Leight Co.		2400
	(To record merchandise purchased on account)
Jul. 11	Accounts payable-Leight Co.	400
	Merchandise inventory		400
	(To record credit memo for purchase returns)
Jul. 12	Cash	631
	Sales discount (2% x $950)	19
	Accounts receivable-Creek Co.		650
	(To record collection on account)
Jul. 16	Accounts payable-Boden	6100
	Merchandise inventory (2% x $6100)		122
	Cash		5978
	(To record payment on account)
Jul. 19	Accounts receivable-Art Co.	1500
	Sales revenue		1500
	(To record sales on account)
Jul. 19	Cost of goods sold	1000
	Merchandise inventory		1000
	(To record the cost of sales)
Jul. 21	Sales returns and allowances	250
	Accounts receivable-Art Co.		250
	(To record credit memo for sales allowance)
Jul. 24	Accounts payable-Leight Co. ($2400 - $400)	2000
	Merchandise inventory [2% x ($2400 - $400)]		40
	Cash		1960
	(To record payment on account)
Jul. 30	Cash	1225
	Sales discount [2% x ($1500 - $250)]	25
	Accounts receivable-Art Co. ($1500 - $250)		1250
	(To record collection on account)
Jul. 31	Accounts receivable-Creek Co.	7200
	Sales revenue		7200
	(To record sales on account)
Jul. 31	Cost of goods sold	4900
	Merchandise inventory		4900
	(To record the cost of sales)