5 Problem 4-1A Preparing journal entries for merchandising activities-perpetual

Question

5 Problem 4-1A Preparing journal entries for merchandising activities-perpetual system LO P1, P2 2 points 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 $6,700 under credit terms of 2/15, n/30, FOB shipping point, invoice dated July1 2 Sold merchandise to Creek Co. for $950 under credit terms of 2/10, n/60, FOB Print shipping point, invoice dated July 2. The merchandise had cost $558 3 Paid $125 cash for freight charges on the purchase of July 1 8 Sold merchandise that had cost $2,000 for $2,400 cash. 9 Purchased merchandise from Leight Co. for $2,400 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9. 11 Received a $400 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 $800 to Art Co. for $1,200 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19 21 Issued a $200 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 $5,500 to Creek Co. for $6,900 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31 Merchandise invento 6,566 11 July 19 Accounts receivable-Art Sales 1,200 1,200 12 July 19 Cost of goods sold 800 Merchandise invento 800 13 July 21 Sales returns and allowances 200 Accounts receivable-Art 200 14 July 24 Accounts payableLeight 2,400 Merchandise invento Cash 15 July 30 Cash Sales discounts 16 July 31 Accounts receivable- Creek 6,900 Sales 6,900 17 July 31 Cost of goods sold 5,500 Merchandise invento 5,500

Explanation / Answer

Journal Entries Debit Credit Jul-01 merchandise Inventory $ 6,700.00 Accounts Payable-Boden $ 6,700.00 To Record Purchase of Inventory from boden on account Jul-02 Accounts Receivable-Creek $     950.00 Sales Revenue $     950.00 (To Record Sale of Inventory to Creek on account) Jul-02 Cost of Goods Sold $     558.00 merchandise Inventory $     558.00 (To Record Cost of goods sold ) Jul-03 merchandise Inventory $     125.00 Cash $     125.00 (To record Freight charges Paid) Jul-08 Cash $ 2,400.00 Sales Revenue $ 2,400.00 (To record Sale of inventory CASH) Jul-08 Cost of Goods Sold $ 2,000.00 merchandise Inventory $ 2,000.00 (To Record Cost of goods sold ) Jul-09 merchandise Inventory $ 2,400.00 Accounts Payable-Leight $ 2,400.00 To Record Purchase of Inventory from Leight on account Jul-11 Accounts Payable-Leight $     400.00 merchandise Inventory $     400.00 To Record Return of Inventory from Leight Jul-12 Cash $     931.00 Sale discount $        19.00 Accounts Receivable-Creek $     950.00 (To record cash received from creek and discount given) Jul-16 Accounts Payable-Boden $ 6,700.00 Cash $ 6,566.00 merchandise Inventory $     134.00 (To record cash Paid to Boden and discount Received) Jul-19 Accounts Receivable-Art $ 1,200.00 Sales Revenue $ 1,200.00 (To Record Sale of Inventory to Art on account) Jul-19 Cost of Goods Sold $     800.00 merchandise Inventory $     800.00 (To Record Cost of goods sold ) Jul-21 Sales return and allowance $     200.00 Accounts Receivable-Art $     200.00 (To record receipt of inventory sold to art) Jul-24 Accounts Payable-Leight $ 2,000.00 merchandise Inventory $        40.00 Cash $ 1,960.00 (To record cash Paid to Leight and discount Received) Jul-30 Cash $ 1,000.00 Sale discount $        20.00 Accounts Receivable-Art $     980.00 (To record cash received from Art and discount given) Jul-31 Accounts Receivable-Creek $ 6,900.00 Sales Revenue $ 6,900.00 (To Record Sale of Inventory to Creek on account) Jul-31 Cost of Goods Sold $ 5,500.00 merchandise Inventory $ 5,500.00 (To Record Cost of goods sold )

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