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 $6,000 under credit terms of 1/15, n/30, FOB shipping point, invoice dated July 1. 2 Sold merchandise to Creek Co. for $900 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $500. 3 Paid $125 cash for freight charges on the purchase of July 1. 8 Sold merchandise that had cost $1,300 for $1,700 cash. 9 Purchased merchandise from Leight Co. for $2,200 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9. 11 Returned $200 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 $100 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 $4,800 to Creek Co. for $7,000 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31. View transaction list

Answer 1

Journal Entries
Date	Account Titles and Explanations	Debit	Credit
Jul. 1	Merchandise Inventory	$6,000
	Accounts Payable - Boden		$6,000
	(To record the purchase of merchandise on account)
Jul. 2	Accounts Receivable - Creek Co.	$900
	Sales Revenue		$900
	(To record the sales made on account)
	Cost of Goods Sold	$500
	Merchandise Inventory		$500
	(To record the cost of goods sold)
Jul. 3	Freight Expenses	$125
	Cash		$125
	(To record the payment of freight expenses)
Jul. 8	Cash	$1,700
	Sales Revenue		$1,700
	(To record the sales made by cash)
	Cost of Goods Sold	$1,300
	Merchandise Inventory		$1,300
	(To record the cost of goods sold)
Jul. 9	Merchandise Inventory	$2,200
	Accounts Payable - Leight Co.		$2,200
	(To record the purchase of merchandise on account)
Jul. 11	Accounts Payable - Leight Co.	$200
	Merchandise Inventory		$200
	(To record the return of merchandise purchased on account)
Jul. 12	Cash ($900 - $18)	$882
	Sales Discount ($900*2/100)	$18
	Accounts Receivable - Creek Co.		$900
	(To record the collection of accounts receivable within discount period)
Jul. 16	Accounts Payable - Boden	$6,000
	Purchase Discount ($6,000*1/100)		$60
	Cash ($6,000 - $60)		$5,940
	(To record the payment of accounts payable within discount period)
Jul. 19	Accounts Receivable - Art Co.	$1,200
	Sales Revenue		$1,200
	(To record the sales made on account)
	Cost of Goods Sold	$800
	Merchandise Inventory		$800
	(To record the cost of goods sold)
Jul. 21	Sales Discount	$100
	Accounts Receivable - Art Co.		$100
	(To record the price reduction for the units sold)
Jul. 24	Accounts Payable - Leight Co. ($2,200 - $200)	$2,000
	Purchase Discount ($2,000*2/100)		$40
	Cash ($2,000 - $40)		$1,960
	(To record the payment of accounts payable within discount period)
Jul. 30	Cash ($1,100 - $22)	$1,078
	Sales Discount ($1,100*2/100)	$22
	Accounts Receivable - Art Co. ($1,200 - $100)		$1,100
	(To record the collection of accounts receivable within discount period)
Jul. 31	Accounts Receivable - Creek Co.	$7,000
	Sales Revenue		$7,000
	(To record the sales made on account)
	Cost of Goods Sold	$4,800
	Merchandise Inventory		$4,800
	(To record the cost of goods sold)