Business, 24.03.2020 05:26 almaloney01
Prepare journal entries to record the following merchandising transactions of Cabela's, which uses the perpetual inventory system and the gross method.
July 1 Purchased merchandise from Boden Company for $6,700 under credit terms of 2/15, n/30, FOB shipping point, invoice dated July 1.
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.
Perpetual Inventory System
Perpetual Inventory System requires a regular update of the merchandise inventory account for every sales and sales return transactions that were undertaken by a business. Some business owners would find it advantageous to apply this inventory system to their business because it gives the management a clear idea as to when will their goods run out-of-stock. On another hand, store owners with large quantity of inventories like grocery stores could find this system harder to implement, unless they tap modern technology.
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Prepare journal entries to record the following merchandising transactions of Cabela's, which uses t...
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