100.00 points Prepare journal entries to record the following merchandising tran
ID: 340579 • Letter: 1
Question
100.00 points Prepare journal entries to record the following merchandising transactions of Cabela's, which applies 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 1Purchased merchandise from Boden Company for $6,700 under credit terms of 2/15, n/30, FOB shipping point, invoice dated July 1 2Sold merchandise to Creek Co. for $950 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $558 3 Paid $105 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 $2,900 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9 1 Received a $900 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. 6 Paid the balance due to Boden Company within the discount period 19 Sold merchandise that cost $1,200 to Art Co. for $1,800 under credit terms of 2/15, n/60 FOB shipping point, invoice dated July 19 21 Issued a $300 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 $7,300 under credit terms of 2/10, n/60 FOB shipping point, invoice dated July 31Explanation / Answer
Journal Entries Account Titles Dr. ($) Cr. ($) 1-Jul Merchandise Inventory 6,700 To Boden Company 6,700 (Purchase merchandise inventory from Boden company under credit terms of2/15, n/30.) 2-Jul Creek Co. 950 To Sales 950 (Sold merchandise to Creek Co. under credit terms 2/10, n/60) 2-Jul Cost of Goods Sold 558 To Merchandise Inventory 558 (Record of COGS) 3-Jul Freight Charges 105 To Cash 105 (Freight charges paid on purchased of Inventory on July 1) 8-Jul Cash 2,400 To Sales 2,400 (sale of merchandise inventory in cash) 8-Jul Cost of Goods sold 2,000 To Merchandise Inventory 2,000 (Record The cost of goods sold) 9-Jul Merchandise Inventory 2,900 To Leight Co. 2,900 (Being purchase of inventory under the credit terms of 2/15, n/60) 11-Jul Leight Co. 900 To Merchandise inventory-Return 900 (Being received credit memorandum for the return of part of the merchandise purchased on july 9) 12-Jul Cash 931 Discount allowed 19 To Creek Co. 950 (Being cash received from Creek Co. for the invoice dated July 2) 16-Jul Boden Co. 6,700 To Cash 6,566 To Discount Received 134 (Being paid all dues to the Boden Co. for purchase of inventory ) 19-Jul Art Co. 1,800 To Sales 1,800 (Sold merchandise to Art Co. under credit terms 2/15, n/60) 19-Jul Cost of Goods Sold 1,200 To Merchandise Inventory 1,200 (Record of COGS) 21-Jul Sales Return and allowance 300 To Art Co. 300 (Being Issue credit memorandum to Art Co. for an allowance on COGS) 24-Jul Leight Co. 2,000 To Cash 1,960 To Discount Received 40 (Being paid all dues to the Leight Co. for purchase of inventory ) 30-Jul Cash 1,323 Discount allowed 27 To Art Co. 1,350 (Being cash received from Art Co. for the invoice dated July 19 i.e. [300 x 1800/1200]) 31-Jul Creek Co. 7,300 To Sales 7,300 (Sold merchandise to Creek Co. under credit terms 2/10, n/60 invoice dated july 31) 31-Jul Cost of Goods Sold 5,500 To Merchandise Inventory 5,500 (Record of COGS)
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