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 $6,500 under credit terms of 2/15, n/30, FOB shipping point, invoice dated July 1.

july 2: Sold merchandise to Creek Co. for $1,000 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $542.

july 3: Paid $110 cash for freight charges on the purchase of July 1.

july 8: Sold merchandise that had cost $1,800 for $2,200 cash.

july 9: Purchased merchandise from Leight Co. for $2,800 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9.

july 11: Received a $800 credit memorandum from Leight Co. for the return of part of the merchandise purchased on July 9.

july 12: Received the balance due from Creek Co. for the invoice dated July 2, net of the discount.

july 16: Paid the balance due to Boden Company within the discount period.

july 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.

july 21: Issued a $250 credit memorandum to Art Co. for an allowance on goods sold on July 19.

july 24: Paid Leight Co. the balance due, net of discount.

july 30: Received the balance due from Art Co. for the invoice dated July 19, net of discount.

july 31: Sold merchandise that cost $5,300 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
July 1	Merchandise Inventory	6500
	Accounts Payable - Boden		6500
July 2	Accounts Receivable - Creek	1000
	Sales		1000
	Costs of Goods Sold	542
	Merchandise Inventory		542
July 3	Merchandise Inventory	110
	Cash		110
July 8	Cash	2200
	Sales		2200
	Cost of Goods Sold	1800
	Merchandise Inventory		1800
July 9	Merchandise Inventory	2800
	Accounts Payable - Leight		2800
July 11	Accounts Payable - Leight	800
	Merchandise Inventory		800
July 12	Cash (1000*98%)	980
	Sales Discounts (1000*2%)	20
	Accounts Receivable - Creek		1000
July 16	Accounts Payable - Boden	6500
	Merchandise Inventory (6500*2%)		130
	Cash (6500-130)		6370
July 19	Accounts Receivable - Art	1500
	Sales		1500
	Cost of Goods Sold	1000
	Merchandise Inventory		1000
July 21	Sales Returns and allowances	250
	Accounts Receivable - Art		250
July 24	Accounts Payable - Leight (2800-800)-40	1960
	Merchandise Inventory (2800-800)*2%	40
	Cash (2800-800)		2000
July 30	Cash (1500-250)-25	1225
	Sales discounts (1500-250)*2%	25
	Accounts receivable - Art (1500-250)		1250
July 31	Accounts receivable	7000
	Sales		7000
	Cost of Goods Sold	5300
	Merchandise Inventory		5300