Prepare journal entries to record the following merchandising transactions of Ca
ID: 341753 • Letter: P
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.)
Jul. 1 Purchased merchandise from Boden Company for $11,200 under credit terms of 1/15, n/30, FOB shipping point, invoice dated July 1. Jul. 2 Sold merchandise to Creek Co. for $3,500 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $2,100. Jul. 3 Paid $1,165 cash for freight charges on the purchase of July 1. Jul. 8 Sold merchandise that had cost $4,100 for $6,900 cash. Jul. 9 Purchased merchandise from Leight Co. for $4,800 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9. Jul. 11 Received a $1,000 credit memorandum from Leight Co. for the return of part of the merchandise purchased on July 9. Jul. 12 Received the balance due from Creek Co. for the invoice dated July 2, net of the discount. Jul. 16 Paid the balance due to Boden Company within the discount period. Jul. 19 Sold merchandise that cost $4,500 to Art Co. for $6,400 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19. Jul. 21 Issued a $1,300 credit memorandum to Art Co. for an allowance on goods sold on July 19. Jul. 24 Paid Leight Co. the balance due, net of discount. Jul. 30 Received the balance due from Art Co. for the invoice dated July 19, net of discount. Jul. 31 Sold merchandise that cost $7,300 to Creek Co. for $12,200 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31.Explanation / Answer
Date Account Debit credit July 1 Merchandise Inventory 11200 Accounts payable -Boden 11200 July 2 (a) Accounts receivable -creek 3500 sales revenue 3500 (b) cost of goods sold 2100 Merchandise Inventory 2100 [to record cost of sales] July 3 Merchandise Inventory 1165 CASH 1165 July 8 (a) cash 6900 sales revenue 6900 (b) cost of goods sold 4100 Merchandise Inventory 4100 jul9 Merchandise Inventory 4800 Accounts payable -leight 4800 July11 Accounts payable-leight 1000 Merchandise Inventory 1000 July 12 cash 3430 sales discount [3500*.02] 70 Accounts receivable -creek 3500 july 16 Accounts payable -Boden 11200 Merchandise Inventory [11200*.01] 112 cash 11088 jul19 Accounts receivable -art 6400 sales revenue 6400 (b) cost of goods sold 4500 Merchandise Inventory 4500 jul21 sales return and allowance 1300 Accounts receivable -art 1300 Jul 24 Accounts payable -leight [4800-1000] 3800 Merchandise Inventory [3800*.02] 76 cash 3724 Jul 30 cash 4998 sales discount [5100*.02] 102 accounts receivable -art [640-1300 5100 july31 Accounts receivable -creek 12200 sales revenue 12200 (B) cost of goods sold 7300 Merchandise Inventory 7300 [to record cost of sales]