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 $6,700 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 $558.
		3		Paid $120 cash for freight charges on the purchase of July 1.
		8		Sold merchandise that had cost $2,000 for $2,400 cash.
		9		Purchased merchandise from Leight Co. for $2,500 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9.
		11		Returned $500 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 $1,200 to Art Co. for $1,800 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19.
		21		Gave a price reduction (allowance) of $300 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 $5,500 to Creek Co. for $7,300 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31.

Answer 1

Answer: Credit Date July 1 Debit 6,700 6,700 July 2 950 950 July 2 558 558 July 3 120 120 July 8 2,400 2,400 July 8 2,000 General Journal Merchandise Inventory Accounts Payable - Boden Accounts Receivable - Creek Sales Cost of Goods sold Merchandise Inventory Merchandise Inventory Cash Cash Sales Cost of Goods sold Merchandise Inventory Merchandise Inventory Accounts Payable - Leight Accounts Payable - Leight Merchandise Inventory Cash ($950 * 98%) Sales Discounts ($950 * 2%) Accounts Receivable - Creek Accounts Payable - Boden Merchandise Inventory ($6,700 * 2%) Cash ($6,700 * 98%) Accounts Receivable - Art Sales 2,000 July 9 2,500 2,500 July 11 500 500 July 12 931 19 950 July 16 6,700 134 6,566 July 19 1,800 1,800

July 19 1,200 1,200 July 21 300 300 July 24 2,000 40 1,960 Cost of Goods sold Merchandise Inventory Sales Returns and Allowance Accounts Receivable - Art Accounts Payable - Leight ($2,500 - $500) Merchandise Inventory [($2,500 - $500) * 2%] Cash [($2,500 - $500) * 98%] Cash [($1,200 - $300) * 98%] Sales Discounts [($1,200 - $300) * 2%] Accounts Receivable - Art Accounts Receivable - Creek Sales Cost of Goods sold Merchandise Inventory July 30 882 18 900 July 31 7,300 7,300 July 31 5,500 5,500