Question

Problem 5-1B Preparing journal entries for merchandising activities-perpetual system P1 P2 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. Purchased merchandise from Havel Co. for $10,000 uſder credit terms of 1/15, n/30, FOB shipping point, invoice May 2dated May 2. Sold merchandise to Rath Co. for $11,000 under credit terms of 2/10, n/60, FOB shipping point, invoice dated May 4 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. Purchased merchandise from Duke Co. for $3,650 under credit terms of 2/15. 1/60, POB destination, invoice dated 10 May 10 Returned $650 of merchandise purchased on May 10 from Duke Co, and debited its account payable for that 12 amount. Received the balance due from Rath Co. for the invoice dated May 4, net of the discount. 14 Check May 14, D Cash, $10,780 Paid the balance due to Havel Co. within the discount period. 17 May 17, Cr. Cash, $9.900 Sold merchandise that cost $1,450 to Tamer Co. for $2,800 under credit terms of 2/15, 1/60, FOB shipping point, 20 invoice dated May 20. Gave a price reduction (allowance) of $300 to Tamer Co. for merchandise sold on May 20 and credited Tamer's 22 accounts receivable for that amount. 25 Paid Duke Co. the balance due, net of the discount.

Answer 1

Date	Account Titles and Explanation	Debit	Credit
May-02	Inventory	10000
	Accounts payable-Havel		10000
	(Purchase on account)
May-04	Accounts receivable-Rath	11000
	Sales revenue		11000
	(Sales on account)
May-04	Cost of goods sold	5600
	Inventory		5600
	(Cost of goods sold)
May-05	Inventory	250
	Cash		250
	(Freight charges paid on purchase)
May-09	Cash	2500
	Sales revenue		2500
	(Cash sales)
May-09	Cost of goods sold	2000
	Inventory		2000
	(Cost of goods sold)
May-10	Inventory	3650
	Accounts payable-Duke		3650
	(Purchase on account)
May-12	Accounts payable-Duke	650
	Inventory		650
	(Purchase returns)
May-14	Cash ($11000 - $220)	10780
	Sales discount (2% x $11000)	220
	Accounts receivable-Rath		11000
	(Cash collected on account)
May-17	Accounts payable-Havel	10000
	Inventory (1% x $10000)		100
	Cash		9900
	(Payment on account)
May-20	Accounts receivable-Tamer	2800
	Sales revenue		2800
	(Sales on account)
May-20	Cost of goods sold	1450
	Inventory		1450
	(Cost of goods sold)
May-22	Sales returns and allowances	300
	Accounts receivable-Tamer		300
	(Price reduction given)
May-25	Accounts payable-Duke ($3650 - $650)	3000
	Inventory (2% x $3000)		60
	Cash		2940
	(Payment on account)
May-30	Cash ($2500 - $50)	2450
	Sales discount (2% x $2500)	50
	Accounts receivable-Tamer ($2800 - $300)		2500
	(Cash collected on account)
May-31	Accounts receivable-Rath	7200
	Sales revenue		7200
	(Sales on account)
May-31	Cost of goods sold	3600
	Inventory		3600
	(Cost of goods sold)