Chapter 5, Problem 1BP

Preparing journal entries for merchandising activities—perpetual system

Prepare journal entries to record the following merchandising transactions of IKEA, which uses the perpetual inventory system and gross method. (Hint: It will help to identify each receivable and payable; for example, record the purchase on May 2 in Accounts Payable—Havel.)

May 2	Purchased merchandise from Havel Co. for $10,000 under credit terms of 1/15, n/30, FOB shipping point, invoice dated May 2.
4	Sold merchandise to Rath Co. for $11,000 under credit terms of 2/10, n/60. FOB shipping point, invoice dated May 4. The merchandise had cost $5,600.
5	Paid $250 cash for freight charges on the purchase of May 2.
9	Sold merchandise that had cost $2,000 for $2,500 cash.
10	Purchased merchandise from Duke Co. for $3,650 under credit terms of 2/15, n/60, FOB destination, invoice dated May 10.
12	Received a $650 credit memorandum from Duke Co. for the return of a portion of the merchandise purchased on May 10.
14	Received the balance due from Rath Co. for the invoice dated May 4, net of the discount.
17	Paid the balance due to Havel Co. within the discount period.
20	Sold merchandise that cost $1,450 to Tamer Co. for $2,800 under credit terms of 2/15, n/60, FOB shipping point, invoice dated May 20.
22	Issued a $300 credit memorandum to Tamer Co. for an allowance on goods sold on May 20.
25	Paid Duke Co. the balance due, net of the discount.
30	Received the balance due from Tamer Co. for the invoice dated May 20, net of discount and allowance.
31	Sold merchandise that cost $3,600 to Rath Co. for $7,200 under credit terms of 2/10, n/60, FOB shipping point, invoice dated May 31.