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.

Answer 1

Journal Entries in the books of Cabela's Perpetual inventory System - Gross Price Method Date Account and explanation Debit Credit $ $ 600 600 July.11 July.12 Accounts payable - Leight co. Merchandise Inventory (Return of inventory) Cash Discount allowed Account Receivable Creek Co. (Receipt of Cash net of discount) Accounts payable Boden Company Cash Discount received (Payment for inventory within discount period) Account receivable Art Co. Sales (Sale of inventory) Cost of Merchandise Sold Merchandise Inventory (Cost of inventory sold) July.16 1200 July.19 1200 800 July.19 800

200 July.21 200 July.24 Allowances Account receivable Art Co. (Allowance given) Accounts payable Leight Co. Cash Discount received (Payment for inventory within discount period) Cash Discount allowed Account Receivable Art Co. (Receipt of Cash net of discount)(1200-200) *2% Account receivable Creek Co. Sales (Sale if inventory) Cost of Merchandise Sold Merchandise Inventory (Cost of inventory sold) 980 20 July 30 1000 7400 July.31 7400 5700 July.31 5700 Note. July 12, July 16 and July 24 amount is not avilabe as previous transaction are not given. So journals are recorded without amount