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 $6,200 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 $517. 3 Paid $105 cash for freight charges on the purchase of July 1. 8 Sold merchandise that had cost $1,500 for $1,900 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 Returned $800 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 $800 to Art Co. for $1,200 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19. 21 Gave a price reduction (allowance) of $200 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 $5,000 to Creek Co. for $7,300 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31.

Answer 1

5 Debit Credit Date Account Title & Explanation 01-Jul Merchandise Inventory Accounts payable - Boden (to record Purchase of inventory on Credit) 6,200 6,200 7 8 9 10 950 11 02-Jul Accounts receivable - Creek Sales (To record sale of Inventory on Credit) 950 12 13 14 517 15 02-Jul Cost of Goods Sold Merchandise Inventory (to record Cost of goods sold) 517 16 105 17 18 19 20 03-Jul Merchandise Inventory Cash (to record Freight charges) 105 21 1,900 22 23 24 25 08-Jul Cash Sales (To record sale of Inventory for cash) 1,900 26 1,500 Cost of Goods Sold Merchandise Inventory (to record Cost of goods sold) 27 28 1,500

30 2,800 31 09-Jul Merchandise Inventory Accounts payable -Leight (to record Purchase of inventory on Credit) 2,800 32 33 34 800 35 11-Jul Accounts payable -Leight Merchandise Inventory (to record return of inventory ) 800 36 37 38 39 40 41 931 19 12-Jul Cash Sales Discount (950 *2%) Accounts receivable -Creek (to record receive of amount from Creek) 950 42 43 44 6,200 16-Jul Accounts payable - Boden Merchandise Inventory (6200*2%) Cash (6200 - 124) (to record the payment made to Boden) 124 6,076 45 46 47 48 49 1,200 19-Jul Accounts receivable - Art Sales (To record sale of Inventory on Credit) 1,200 50 51

52 800 53 Cost of Goods Sold Merchandise Inventory (to record Cost of goods sold) 800 54 55 200 56 57 200 58 59 21-Jul Sales Returns & allowances Accounts receivable -Art (to record return of goods sold to Art) 24-Jul Accounts payable - Leight (2800-800) Merchandise Inventory (2000*2%) Cash (2000-40) (to record the payment made to Leight) 2,000 60 61 62 63 64 40 1,960 65 980 20 30-Jul Cash Sales Discount (1000*2%) Accounts receivable -Art (1200-200) (to record receive of amount from Art) 66 67 68 69 70 1,000 7,300 31-Jul Accounts receivable - Creek Sales (To record sale of Inventory on Credit) 71 72 7,300

74 5,000 75 Cost of Goods Sold Merchandise Inventory (to record Cost of goods sold) 5,000 76 77 78