On April 2, Nancy Hansel uses her J. C. Penney Company credit card to purchase m

Question

On April 2, Nancy Hansel uses her J. C. Penney Company credit card to purchase merchandise from a J.C. Penney store for $1,500. On May 1, Hansel is billed for the $1,500 amount due. Hansel pays $700 on the balance due on May 3. On June 1, Hansel receives a bill for the amount due, including interest at 1.0% per month on the unpaid balance as of May 3. Prepare the entries on J.C. Penney Co.'s books related to the transactions that occurred on April 2, May 3, and June 1.

Date Account/Description Debit Credit
Apr. 2

May 3

June 1

Explanation / Answer

J. C. Penney Company April 2 Accounts Receivable will increase by $1500 Revenue of $1500 can be recorded May 3: Accounts Receivable decrease by $700 to become $800 Cash Account increases by $700 June 1 Interest Receivable will be added to Accounts Receivables Interest Receivable = 1% of $800 = $8

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