Problem 4-1A (Algo) Preparing journal entries for merchandising activities LO P1, P2 Prepare journal entries to record the following merchandising transactions of Cabela's, which uses the perpetual Inventory system and the gross method. July 1Purchased merchandise from boden Company for $6,100 under credit terms of 2/15, 8/3, F08 shipping point, invoice dated July 11 July 2 Sold merchandise to Creek Company for $950 under credit teres of 2/10, n/de, Foo shipping point, invoice dated July 2. the merchandise had cost sses, July 1 Paid $130 cash for freight charges on the purchase of July 1. July sold eerchandise that had cost $1,400 for $1,800 cash. July Purchased serchandise from Leight Company for $2,400 under credit terms of 2/15, n/60, rod destination, invoice dated July July 11 seturned $400 of merchandise purchased on July 9 from Leight Company and debited its account payable for that amount. July 12 Received the balance due from creek Company for the invoice dated July 2, net of the discount. July 16 Paid the balance due to Boden Company within the discount period. July 19 Sold merchandise that cost $800 to Art Company for $1,200 under credit teres of 2/15, n/66, FOB shipping point, invoice dated July 19, July 21 Gave price reduction (allowance) of $200 to Art Company for serchandise sold on July 19 and credited Art's accounts receivable for that amount. July 24 Paid Leight Company the balance due, net of discount. July 30 Received the balance due From Art company for the invoice dated July 19, net of discount. July 11 sold serchandise that cost $4,000 to Creek Company for $6,0a under credit terms of 2/10, 0/60, Foo shipping point, Invoice dated July 31.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
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