Chapter 7, Problem 1PSB

Summary Introduction

Introduction: Journal entry is a technique of booking and recording the financial transaction in chronological manner of any company. Account receivable is an amount of money which company has to receive from someone for any provided service or for sale of product.

To prepare: The general journal entries for the following transaction.

Answer to Problem 1PSB

Journal entries are shown below.

Explanation of Solution

Journal entries of A co. for the month of August are shown below.

Date	Particular	PR	Dr.$	Cr.$
Aug 4	Account receivable −M.C.		3700
	Sales			3700
	(to record the sales on credit)
	Cost of goods sold		2000
	Merchandise Inventory			2000
	(To record cost of sales)
Aug 10	Cash		5044
	credit card expense(   $\$5,200\times 0.03$ )		156
	Sales			5200
	(To record credit card sales less fee)
	Cost of goods sold		2800
	Merchandise inventory			2800
	(To record cost of sales)
Aug 11	Cash		1,225
	Credit card expense (   $\$1,250\times 0.02$ )		25
	Sales			1250
	(To record credit card sales less fee)
	Cost of goods sold		900
	Merchandise			900
	(To record cost of sales)
Aug 14	Cash		3,700
	Account Receivable M.C			3,700
	(To record cash received in payment of account)
Aug 15	Cash		3185
	Credit card expense   $(\$32,50\times 0.02)$		65
	Sales			3250
	(To record credit card sales less fee)
	Cost of goods sold		1758
	Merchandise inventory			1758
	(to record cost of sales)
Aug 22	Allowance for doubtful account		498
	Account receivable C Co			498
	(to write off account due)
Aug 25	Cash		1225
	Account Receivable G.C			1225
	(To record cash received in payment of account)
	Cash		3185
	Account Receivable G.C			3185
	(To record cash received in payment of account)