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.
		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.
		3		Paid $115 cash for freight charges on the purchase of July 1.
		8		Sold merchandise that had cost $1,800 for $2,200 cash.
		9		Purchased merchandise from Leight Co. for $2,800 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9.
		11		Received a $800 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 $5,300 to Creek Co. for $6,800 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31.

Can i please have some help, i dont understand how to do these problems. Thank you.

Answer 1

Date	Account titles and explanation	Debit	Credit
July 1	Merchandise inventory	$6500
	Accounts Payable—Boden Co.		$6500
	(To record merchandise inventory purchased)
July 2	Accounts receivable-  Creek Co	$1000
	Sales		$1000
	(To record merchandise inventory sold)
July 2	Cost of goods sold	$542
	Merchandise inventory		$542
	(To record cost of goods sold)
July 3	Merchandise inventory	$115
	Cash		$115
	(To record freight paid)
July 8	Cash	$2200
	Sales		$2200
	(To record merchandise inventory sold)
July 8	Cost of goods sold	$1800
	Merchandise inventory		$1800
	(To record cost of goods sold)
July 9	Merchandise inventory	$2800
	Accounts payable- Leight Co.		$2800
	(To record merchandise inventory purchased)
July 11	Accounts payable- Leight Co.	$800
	Merchandise inventory		$800
	(To record credit memorandum received)
July 12	Cash (1000*98%)	$980
	Sales discounts (1000*2%)	$20
	Accounts receivable-  Creek Co		$1000
	(To record cash received from Creek Co.)
July 16	Accounts Payable—Boden Co.	$6500
	Cash (6500*98%)		$6370
	Merchandise inventory (6500*2%)		$130
	(To record cash paid to Boden Co.)
July 19	Accounts receivable- Art Co.	$1500
	Sales revenue		$1500
	(To record merchandise inventory sold)
July 19	Cost of goods sold	$1000
	Merchandise inventory		$1000
	(To record cost of goods sold)
July 21	Sales returns and allowances	$250
	Accounts receivable- Art Co		$250
	(To record credit memorandum issued)
July 24	Accounts payable- Leight Co (2800-800)	$2000
	Cash (2000*98%)		$1960
	Merchandise inventory (2000*2%)		$40
	(To record cash paid to Leight Co.)
July 30	Cash (1250*98%)	$1225
	Sales discounts (1250*2%)	$25
	Accounts receivable- Art Co. (1500-250)		$1250
	(To record cash received from Art Co.)
July 31	Accounts receivable- Creek Co.	$6800
	Sales		$6800
	(To record merchandise inventory sold)
July 31	Cost of goods sold	$5300
	Merchandise inventory		$5300
	(To record cost of goods sold)

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