Atlas Co. allows select customers to make purchases on credit. Its other custome
ID: 2343498 • Letter: A
Question
Atlas Co. allows select customers to make purchases on credit. Its other customers can use either of two credit cards: Zisa or Access. Zisa deducts a 2.0% service charge for sales on its credit card and credits the bank account of Atlas immediately when credit card receipts are deposited. Atlas deposits the Zisa credit card receipts each business day. When customers use Access credit cards, Atlas accumulates the receipts for several days before submitting them to Access for payment. Access deducts a 1.0% service charge and usually pays within one week of being billed. Atlas completes the following transactions in June. (The terms of all credit sales are 2/15, n/30, and all sales are recorded at the gross price.)
June
4
Sold $700 of merchandise (that had cost $350) on credit to Anne Cianci.
5
Sold $7,000 of merchandise (that had cost $3,500) to customers who used their Zisa cards.
6
Sold $5,694 of merchandise (that had cost $2,847) to customers who used their Access cards.
8
Sold $4,940 of merchandise (that had cost $2,470) to customers who used their Access cards.
10
Submitted Access card receipts accumulated since June 6 to the credit card company for payment.
13
Wrote off the account of Nakia Wells against the Allowance for Doubtful Accounts. The $499 balance in Wells
Explanation / Answer
List the account used for the transaction. Note whether the exchange came from sales, cash, insurance, business expenses or another type of account. Keep this short, using abbreviations and account nicknames. For clarity, list all possible accounts on a separate page for the reader to reference. Note whether the transaction was a debit or credit. A debit indicates money was taken from the account to pay a debt . A credit indicates money was put into the account as payment. Write down the amount of the transaction. This is simply the amount of money, in dollar format, of the exchange in this entry. Consider putting debits in parentheses, using color codes or using plus and minus signs to signify positive and negative amounts. Describe any information needed to understand the transaction, such as a vendor name or a change in delivery. Keep this information concise. The reader shoould be able to understand the extra information without wading through too many words. Identify the type of transaction and which general ledger accounts it affects. Common journal entries relate to revenue, costs of goods sold, inventory accounts payable or receivable and expenses. Review the information that documents the transaction. Retrieve the dollar amounts associated with the transaction. Prepare a journal entry. Each entry requires a debit and credit, such as balance changes in two separate general ledger accounts. Dollar amounts should equal those in the associated paperwork. List the account number, account name and dollar amount for each debit and credit on separate line in the entry. Post the entry into the general ledger. Enter the dollar amounts into each account, along with a brief yet informative description of the transaction. Debit Accounts Receivable 500 Debit Cost of Goods Sold 250 Credit Sales 500 Credit Inventory 500 June 5 Debit Cash 9,168 [9,600 x 95.5%] Debit Card Service Charges 432 [9,600 x 4.5%] Debit Cost of Goods Sold 4,800 Credit Sales 9,600 Credit Inventory 4,800 June 6 Debit Receivable from Access 5,456.11 [5,654 x 96.5%] Debit Card Service Charges 197.89 [5,654 x 3.5%] Debit Cost of Goods Sold 2,827 Credit Sales 5,654 Credit Inventory 2,827 June 8 Debit Receivable from Access 4,583.75 [4,750 x 96.5%] Debit Card Service Charges 166.25 [4,750 x 3.5%] Debit Cost of Goods Sold 2,375 Credit Sales 4,750 Credit Inventory 2,375 June 10 No additional entry is necessary if the receivable is recorded at the time of the sales June 13 Debit Allowance for Doubtful Accounts 401 Credit Accounts Receivable 401 June 17 Debit Cash 10,039.86 Credit Receivable from Access 10,039.86 [5,456.11 + 4,583.75] June 18 Debit Cash 490 Debit Sales Discounts 10 Credit Accounts Receivable 500
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