QS 9-1 Credit card sales 1- Sold $16,000 of merchandise, that cost $7,000, on Ma

Question

QS 9-1 Credit card sales

1- Sold $16,000 of merchandise, that cost $7,000, on Master Card credit cards. The net cash receipts from sales are immediately deposited in the seller's bank account. Master Card charges a 4% fee.

2-Sold$18,000 of merchandise, that cost $7,800, on an assortment of credit cards. Net cash receipts are received 5 days later, and a 3% fee is charged.

QS 9-2 Allowance method for bad debts

Kordas Corp. , uses the allowance method to account for uncollectibles. On october 31, it wrote off a $750 account of a customer, D. Elwick. On December 9, it receives a $400 payment From Elwick.

1-Prepare the journal entry or entries for October 31.
2- Prepare the journal entry or entries for December 9; assume no additional money is expected from Elwick.

QS 9-5 Note receivable

On August 2, 2009, Passat Co. receives $9,000, 90-Day, 6% note from customer Dee Kissick as payment on her $9,000 account. Prepare Passat's journal entries for August 2 and for the note's maturity date assuming the note is honored by Kissick.

Explanation / Answer

1. DR Cash 15,360 DR Credit card expenses 640 CR Sales revenue 16,000 DR Cost of sales 7,000 CR Merchandise inventory 7,000 DR Accounts receivable- CC company 17,460 DR Credit card expenses 540 CR Sales revenue 18,000 DR Cost of sales 7,800 CR Merchandise inventory 7,800 DR Cash 17,460 CR A/R CC company 17,460 DR Allowance for doubtful accounts 750 CR Accounts receivable 750 DR Accounts receivable 400 CR ADA 400 DR Cash 400 CR A/R 400 DR Notes receivable 9,000 CR A/R 9,000 DR Cash 9,133 CR Interest Income 133 CR Note Receivable 9,000 (I assumed a 365 day year and rounded the interest income to the nearest $. I also assumed no interest had been accrued over the life of the note).

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