9. Prepare journal entries to record the following merchandising transactions of

Question

9. 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 $6,300 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 $525. 3 Paid $125 cash for freight charges on the purchase of July 1. 8 Sold merchandise that had cost $1,600 for $2,000 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 Received a $200 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 $5,100 to Creek Co. for $7,100 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31.

Explanation / Answer

1. Purchase a/c Dr. $6300

To boden co. $6300

2. Creek co. a/c Dr. $1000

To sales a/c $1000

3. Freight a/c Dr . $125

To cash a/c $125

8. Cash a/c Dr. $2000

To sales $2000

9. Purchase a/c Dr . $2200

To leight co .$2200

11. Leight co. $200

To purchase return $200

12. Cash a/c Dr . $980

Discount a/c Dr. $20

To Creek co. $1000

16. Boden co. Dr. $6300

To discount a/c $126

To cash a/c $ 6174

19. Art co. A/c Dr. $1500

To sales a/c $1500

21. Sales return a/c Dr. $250

To art co. $ 250

24. Leight co. a/c Dr. $2000

To discount $40

To cash $1960

30. Cash a/c Dr. $1225

Discount a/c Dr. 25

To art co. $1250

31. Creek co. a/c Dr. $7100

To sales a/c $7100

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