Problem 4-1A Preparing journal entries for merchandising activities-perpetual system 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. 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 July 1. 2 Sold 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 $135 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 $2,800 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9. 11 Returned $800 of merchandise purchased on July 9 from Leight Co. and debited its account payable for that amount. 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 $1,200 to Art Co. for $1,800 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19. 21 Gave a price reduction (allowance) of $300 to Art Co. for merchandise sold on July 19 and credited Art's accounts receivable for that amount. 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 $7,400 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31. 8 July 11 800 Accounts payableLeight Merchandise inventory 800 9 July 12 Cash 558 X Sales discounts 135 x Accounts receivableCreek 693 x 10 July 16 Accounts payableBoden 6,700 Cash 4,700 X Discount on bonds payable 2,000 X 14 July 24 Accounts payableLeight 2,400 Cash 2,000 X Sales discounts 400 15 July 30 Cash 2,400 Sales discounts 2,000 Accounts receivable-Art 400 16 July 31 Accounts receivableCreek 7,400 Sales 7,400 17 July 31 Accounts receivable Creek 5,500 Sales 5,500