Journal Entry : It means record of financial data related to business transactions in a journal in a manner so that debit equals credit. It provides an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health. Rules of Journal Entry: Assets: Increase in asset should be debit and decrease should be credit. Liabilities: Increase in liabilities should be credit and decrease should be debit. Equity: Increase in Equity should be credit and decrease should be debit. Expense: Increase in expense should be debit and decrease should be credit. Revenue: Increase in revenue should be credit and decrease should be debit. Credit Card: It refers to the card made of plastic and issued by a bank. It provides an individual to buy goods and services on credit when they have shortage of cash. Perpetual Inventory System: It refers to the system to record the transaction related to inventories at the time of their occurrence. Each sale and purchase is recorded at the time they occurred. To prepare: Journal entries for the given credit card sales transactions.

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Answer 1

Question

Chapter 7, Problem 1PSB

To determine

Journal Entry:

It means record of financial data related to business transactions in a journal in a manner so that debit equals credit. It provides an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health.

Rules of Journal Entry:

Assets: Increase in asset should be debit and decrease should be credit.

Liabilities: Increase in liabilities should be credit and decrease should be debit.

Equity: Increase in Equity should be credit and decrease should be debit.

Expense: Increase in expense should be debit and decrease should be credit.

Revenue: Increase in revenue should be credit and decrease should be debit.

Credit Card:

It refers to the card made of plastic and issued by a bank. It provides an individual to buy goods and services on credit when they have shortage of cash.

Perpetual Inventory System:

It refers to the system to record the transaction related to inventories at the time of their occurrence. Each sale and purchase is recorded at the time they occurred.

To prepare: Journal entries for the given credit card sales transactions.

Expert Solution & Answer

Explanation of Solution

Aug 4 sold $3,700 of merchandise on credit (that had cost $2,000) to M.C.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 4	Accounts Receivables (M.C)		3,700
	Sales			3,700
	(Being sales of $650 on credit is recorded )

Table(1)

Since, the sales of merchandise on credit will increase the value of accounts receivables and accounts receivable is an asset account, it is debited when it is increased.
Since, the sales of merchandise would increase the value of sales in the company and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 4	Cost of Goods Sold		2,000
	Merchandise Inventory			2,000
	(Being cost of goods sold is recorded )

Table(2)

Since, the cost of merchandise sold is $2000 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 10 sold $5,200 of merchandise (that had cost $2,800) to customers who used their commerce bank credit card.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 10	Cash		5,044
	Credit Card Expense		156
	Sales			5,200
	(Being sales of $5,200 is recorded payment for which is made with MasterCard credit cards )

Table(3)

Since, payment with credit cards includes immediately recognition of cash to the company and cash is an asset account, it is debited when it is increased.
Since, payment with credit card includes some charges for the company and it is an expense account, it is debited when it is increased.
Since, sales of merchandise have been made and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 10	Cost of Goods Sold		2,800
	Merchandise Inventory			2,800
	(Being cost of goods sold is recorded )

Table(4)

Since, the cost of merchandise sold is $2,800 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 11 sold $1,250 of merchandise (that had cost $900) to customers who used their G.M cards.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 11	Cash		1,225
	Credit Card Expense		25
	Sales			1,250
	(Being sales of $1,250 is recorded payment for which is made with MasterCard credit cards )

Table(5)

Since, payment with credit cards includes immediately recognition of cash to the company and cash is an asset account, it is debited when it is increased.
Since, payment with credit card includes some charges for the company and it is an expense account, it is debited when it is increased.
Since, sales of merchandise have been made and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 11	Cost of Goods Sold		900
	Merchandise Inventory			900
	(Being cost of goods sold is recorded )

Table(6)

Since, the cost of merchandise sold is $900 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 14 received M.C’s check in full payment for payment for the purchase of Aug 4.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 14	Cash		3,700
	Account Receivable (M.C)			3,700
	(Being payment from an account receivable is recorded)

Table(7)

Since, payment from an accounts receivable will increase the cash and cash is an asset account, it is debited when it is increased.
Since, payment from an accounts receivable will decrease the accounts receivable and accounts receivable is an asset account, it is credited when it is decreased.

Aug 15 sold $3,250 of merchandise (that had cost $1,758) to customer who used their G.M cards.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 15	Cash		3,185
	Credit Card Expense		65
	Sales			3,250
	(Being sales of $3,250 is recorded payment for which is made with MasterCard credit cards )

Table(8)

Since, payment with credit cards includes immediately recognition of cash to the company and cash is an asset account, it is debited when it is increased.
Since, payment with credit card includes some charges for the company and it is an expense account, it is debited when it is increased.
Since, sales of merchandise have been made and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 15	Cost of Goods Sold		1,758
	Merchandise Inventory			1,758
	(Being cost of goods sold is recorded )

Table(9)

Since, the cost of merchandise sold is $2000 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 22 wrote off the account of C.C against the allowance for doubtful accounts. The $498 balance in C.C’s account stemmed from a credit sale in November of last year.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 22	Allowance for Doubtful Account		498
	Accounts Receivable			498
	(Being write off of uncollectible accounts receivable is recorded)

Table(10)

Since, in allowance method of accounting for accounts receivable the amount for bad debt expense is deducted from allowance for doubtful account which is a contra asset account, it is debited when it s decreased.
Since, in allowance method of accounting for accounts receivable the deduction is made against the account receivable account which is an asset account, it is credited when it s decreased.

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PART 2. (22 marks) Mangal Furnishings produce serving trays for the tourist industry in a five-stage process - Cutting & Shaping, Assembly, Sanding, Finishing and Packaging. Upon entering the finishing process, before the trays are stained and polished, a specialized piece of equipment is used to engrave a logo on each tray. After Packaging, the trays are sent to the business warehouse for delivery to customers. The following data relates to the Finishing Process for the month of March during which 3,800 trays valued at $597.90 each were transferred in from the Sanding Process. Other production costs incurred during the month are summarized as follows: Direct Materials Added Direct Manufacturing Wages Hireage cost of specialized logo equipment Manufacturing Overhead $343,380 $830,150 $21,300 $412,100 Process inspection occurs during the process and normally 2% of the trays entering the Finishing process are rejected and sold as scrap to local retailers at $750 each. During the month…

Cline Manufacturing Company uses a job order system and maintains perpetual inventory records. Indicate the the appropriate account(s) to be debited and credited for the transactions listed below. (On multiple entries enter answers in alphabetical order.) Transactions 1. Raw materials were purchased on account. 2. Issued a check to Dixon Machine Shop for repair work on factory equipment. 3. Direct materials were requisitioned for Job 280. 4. Factory labor was paid as incurred. 5. Recognized direct labor and indirect labor used. 6. The production department requisitioned 7. indirect materials for use in the factory. Manufacturing overhead was applied to production based on a predetermined overhead rate of $8 per labor hour. 8. Goods that were completed were transferred to finished goods inventory. 9. Goods costing $80,000 were sold for $105,000 on account. 10. Paid for raw materials purchased previously on account. Account(s) Debited

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Answer 2

Question

Chapter 7, Problem 1PSB

To determine

Journal Entry:

It means record of financial data related to business transactions in a journal in a manner so that debit equals credit. It provides an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health.

Rules of Journal Entry:

Assets: Increase in asset should be debit and decrease should be credit.

Liabilities: Increase in liabilities should be credit and decrease should be debit.

Equity: Increase in Equity should be credit and decrease should be debit.

Expense: Increase in expense should be debit and decrease should be credit.

Revenue: Increase in revenue should be credit and decrease should be debit.

Credit Card:

It refers to the card made of plastic and issued by a bank. It provides an individual to buy goods and services on credit when they have shortage of cash.

Perpetual Inventory System:

It refers to the system to record the transaction related to inventories at the time of their occurrence. Each sale and purchase is recorded at the time they occurred.

To prepare: Journal entries for the given credit card sales transactions.

Expert Solution & Answer

Explanation of Solution

Aug 4 sold $3,700 of merchandise on credit (that had cost $2,000) to M.C.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 4	Accounts Receivables (M.C)		3,700
	Sales			3,700
	(Being sales of $650 on credit is recorded )

Table(1)

Since, the sales of merchandise on credit will increase the value of accounts receivables and accounts receivable is an asset account, it is debited when it is increased.
Since, the sales of merchandise would increase the value of sales in the company and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 4	Cost of Goods Sold		2,000
	Merchandise Inventory			2,000
	(Being cost of goods sold is recorded )

Table(2)

Since, the cost of merchandise sold is $2000 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 10 sold $5,200 of merchandise (that had cost $2,800) to customers who used their commerce bank credit card.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 10	Cash		5,044
	Credit Card Expense		156
	Sales			5,200
	(Being sales of $5,200 is recorded payment for which is made with MasterCard credit cards )

Table(3)

Since, payment with credit cards includes immediately recognition of cash to the company and cash is an asset account, it is debited when it is increased.
Since, payment with credit card includes some charges for the company and it is an expense account, it is debited when it is increased.
Since, sales of merchandise have been made and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 10	Cost of Goods Sold		2,800
	Merchandise Inventory			2,800
	(Being cost of goods sold is recorded )

Table(4)

Since, the cost of merchandise sold is $2,800 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 11 sold $1,250 of merchandise (that had cost $900) to customers who used their G.M cards.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 11	Cash		1,225
	Credit Card Expense		25
	Sales			1,250
	(Being sales of $1,250 is recorded payment for which is made with MasterCard credit cards )

Table(5)

Since, payment with credit cards includes immediately recognition of cash to the company and cash is an asset account, it is debited when it is increased.
Since, payment with credit card includes some charges for the company and it is an expense account, it is debited when it is increased.
Since, sales of merchandise have been made and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 11	Cost of Goods Sold		900
	Merchandise Inventory			900
	(Being cost of goods sold is recorded )

Table(6)

Since, the cost of merchandise sold is $900 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 14 received M.C’s check in full payment for payment for the purchase of Aug 4.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 14	Cash		3,700
	Account Receivable (M.C)			3,700
	(Being payment from an account receivable is recorded)

Table(7)

Since, payment from an accounts receivable will increase the cash and cash is an asset account, it is debited when it is increased.
Since, payment from an accounts receivable will decrease the accounts receivable and accounts receivable is an asset account, it is credited when it is decreased.

Aug 15 sold $3,250 of merchandise (that had cost $1,758) to customer who used their G.M cards.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 15	Cash		3,185
	Credit Card Expense		65
	Sales			3,250
	(Being sales of $3,250 is recorded payment for which is made with MasterCard credit cards )

Table(8)

Since, payment with credit cards includes immediately recognition of cash to the company and cash is an asset account, it is debited when it is increased.
Since, payment with credit card includes some charges for the company and it is an expense account, it is debited when it is increased.
Since, sales of merchandise have been made and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 15	Cost of Goods Sold		1,758
	Merchandise Inventory			1,758
	(Being cost of goods sold is recorded )

Table(9)

Since, the cost of merchandise sold is $2000 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 22 wrote off the account of C.C against the allowance for doubtful accounts. The $498 balance in C.C’s account stemmed from a credit sale in November of last year.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 22	Allowance for Doubtful Account		498
	Accounts Receivable			498
	(Being write off of uncollectible accounts receivable is recorded)

Table(10)

Since, in allowance method of accounting for accounts receivable the amount for bad debt expense is deducted from allowance for doubtful account which is a contra asset account, it is debited when it s decreased.
Since, in allowance method of accounting for accounts receivable the deduction is made against the account receivable account which is an asset account, it is credited when it s decreased.

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Answer 3

Question

Chapter 7, Problem 1PSB

To determine

Journal Entry:

It means record of financial data related to business transactions in a journal in a manner so that debit equals credit. It provides an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health.

Rules of Journal Entry:

Assets: Increase in asset should be debit and decrease should be credit.

Liabilities: Increase in liabilities should be credit and decrease should be debit.

Equity: Increase in Equity should be credit and decrease should be debit.

Expense: Increase in expense should be debit and decrease should be credit.

Revenue: Increase in revenue should be credit and decrease should be debit.

Credit Card:

It refers to the card made of plastic and issued by a bank. It provides an individual to buy goods and services on credit when they have shortage of cash.

Perpetual Inventory System:

It refers to the system to record the transaction related to inventories at the time of their occurrence. Each sale and purchase is recorded at the time they occurred.

To prepare: Journal entries for the given credit card sales transactions.

Expert Solution & Answer

Explanation of Solution

Aug 4 sold $3,700 of merchandise on credit (that had cost $2,000) to M.C.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 4	Accounts Receivables (M.C)		3,700
	Sales			3,700
	(Being sales of $650 on credit is recorded )

Table(1)

Since, the sales of merchandise on credit will increase the value of accounts receivables and accounts receivable is an asset account, it is debited when it is increased.
Since, the sales of merchandise would increase the value of sales in the company and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 4	Cost of Goods Sold		2,000
	Merchandise Inventory			2,000
	(Being cost of goods sold is recorded )

Table(2)

Since, the cost of merchandise sold is $2000 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 10 sold $5,200 of merchandise (that had cost $2,800) to customers who used their commerce bank credit card.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 10	Cash		5,044
	Credit Card Expense		156
	Sales			5,200
	(Being sales of $5,200 is recorded payment for which is made with MasterCard credit cards )

Table(3)

Since, payment with credit cards includes immediately recognition of cash to the company and cash is an asset account, it is debited when it is increased.
Since, payment with credit card includes some charges for the company and it is an expense account, it is debited when it is increased.
Since, sales of merchandise have been made and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 10	Cost of Goods Sold		2,800
	Merchandise Inventory			2,800
	(Being cost of goods sold is recorded )

Table(4)

Since, the cost of merchandise sold is $2,800 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 11 sold $1,250 of merchandise (that had cost $900) to customers who used their G.M cards.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 11	Cash		1,225
	Credit Card Expense		25
	Sales			1,250
	(Being sales of $1,250 is recorded payment for which is made with MasterCard credit cards )

Table(5)

Since, payment with credit cards includes immediately recognition of cash to the company and cash is an asset account, it is debited when it is increased.
Since, payment with credit card includes some charges for the company and it is an expense account, it is debited when it is increased.
Since, sales of merchandise have been made and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 11	Cost of Goods Sold		900
	Merchandise Inventory			900
	(Being cost of goods sold is recorded )

Table(6)

Since, the cost of merchandise sold is $900 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 14 received M.C’s check in full payment for payment for the purchase of Aug 4.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 14	Cash		3,700
	Account Receivable (M.C)			3,700
	(Being payment from an account receivable is recorded)

Table(7)

Since, payment from an accounts receivable will increase the cash and cash is an asset account, it is debited when it is increased.
Since, payment from an accounts receivable will decrease the accounts receivable and accounts receivable is an asset account, it is credited when it is decreased.

Aug 15 sold $3,250 of merchandise (that had cost $1,758) to customer who used their G.M cards.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 15	Cash		3,185
	Credit Card Expense		65
	Sales			3,250
	(Being sales of $3,250 is recorded payment for which is made with MasterCard credit cards )

Table(8)

Since, payment with credit cards includes immediately recognition of cash to the company and cash is an asset account, it is debited when it is increased.
Since, payment with credit card includes some charges for the company and it is an expense account, it is debited when it is increased.
Since, sales of merchandise have been made and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 15	Cost of Goods Sold		1,758
	Merchandise Inventory			1,758
	(Being cost of goods sold is recorded )

Table(9)

Since, the cost of merchandise sold is $2000 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 22 wrote off the account of C.C against the allowance for doubtful accounts. The $498 balance in C.C’s account stemmed from a credit sale in November of last year.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 22	Allowance for Doubtful Account		498
	Accounts Receivable			498
	(Being write off of uncollectible accounts receivable is recorded)

Table(10)

Since, in allowance method of accounting for accounts receivable the amount for bad debt expense is deducted from allowance for doubtful account which is a contra asset account, it is debited when it s decreased.
Since, in allowance method of accounting for accounts receivable the deduction is made against the account receivable account which is an asset account, it is credited when it s decreased.

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Answer 4

Question

Chapter 7, Problem 1PSB

To determine

Journal Entry:

It means record of financial data related to business transactions in a journal in a manner so that debit equals credit. It provides an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health.

Rules of Journal Entry:

Assets: Increase in asset should be debit and decrease should be credit.

Liabilities: Increase in liabilities should be credit and decrease should be debit.

Equity: Increase in Equity should be credit and decrease should be debit.

Expense: Increase in expense should be debit and decrease should be credit.

Revenue: Increase in revenue should be credit and decrease should be debit.

Credit Card:

It refers to the card made of plastic and issued by a bank. It provides an individual to buy goods and services on credit when they have shortage of cash.

Perpetual Inventory System:

It refers to the system to record the transaction related to inventories at the time of their occurrence. Each sale and purchase is recorded at the time they occurred.

To prepare: Journal entries for the given credit card sales transactions.

Expert Solution & Answer

Explanation of Solution

Aug 4 sold $3,700 of merchandise on credit (that had cost $2,000) to M.C.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 4	Accounts Receivables (M.C)		3,700
	Sales			3,700
	(Being sales of $650 on credit is recorded )

Table(1)

Since, the sales of merchandise on credit will increase the value of accounts receivables and accounts receivable is an asset account, it is debited when it is increased.
Since, the sales of merchandise would increase the value of sales in the company and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 4	Cost of Goods Sold		2,000
	Merchandise Inventory			2,000
	(Being cost of goods sold is recorded )

Table(2)

Since, the cost of merchandise sold is $2000 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 10 sold $5,200 of merchandise (that had cost $2,800) to customers who used their commerce bank credit card.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 10	Cash		5,044
	Credit Card Expense		156
	Sales			5,200
	(Being sales of $5,200 is recorded payment for which is made with MasterCard credit cards )

Table(3)

Since, payment with credit cards includes immediately recognition of cash to the company and cash is an asset account, it is debited when it is increased.
Since, payment with credit card includes some charges for the company and it is an expense account, it is debited when it is increased.
Since, sales of merchandise have been made and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 10	Cost of Goods Sold		2,800
	Merchandise Inventory			2,800
	(Being cost of goods sold is recorded )

Table(4)

Since, the cost of merchandise sold is $2,800 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 11 sold $1,250 of merchandise (that had cost $900) to customers who used their G.M cards.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 11	Cash		1,225
	Credit Card Expense		25
	Sales			1,250
	(Being sales of $1,250 is recorded payment for which is made with MasterCard credit cards )

Table(5)

Since, payment with credit cards includes immediately recognition of cash to the company and cash is an asset account, it is debited when it is increased.
Since, payment with credit card includes some charges for the company and it is an expense account, it is debited when it is increased.
Since, sales of merchandise have been made and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 11	Cost of Goods Sold		900
	Merchandise Inventory			900
	(Being cost of goods sold is recorded )

Table(6)

Since, the cost of merchandise sold is $900 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 14 received M.C’s check in full payment for payment for the purchase of Aug 4.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 14	Cash		3,700
	Account Receivable (M.C)			3,700
	(Being payment from an account receivable is recorded)

Table(7)

Since, payment from an accounts receivable will increase the cash and cash is an asset account, it is debited when it is increased.
Since, payment from an accounts receivable will decrease the accounts receivable and accounts receivable is an asset account, it is credited when it is decreased.

Aug 15 sold $3,250 of merchandise (that had cost $1,758) to customer who used their G.M cards.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 15	Cash		3,185
	Credit Card Expense		65
	Sales			3,250
	(Being sales of $3,250 is recorded payment for which is made with MasterCard credit cards )

Table(8)

Since, payment with credit cards includes immediately recognition of cash to the company and cash is an asset account, it is debited when it is increased.
Since, payment with credit card includes some charges for the company and it is an expense account, it is debited when it is increased.
Since, sales of merchandise have been made and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 15	Cost of Goods Sold		1,758
	Merchandise Inventory			1,758
	(Being cost of goods sold is recorded )

Table(9)

Since, the cost of merchandise sold is $2000 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 22 wrote off the account of C.C against the allowance for doubtful accounts. The $498 balance in C.C’s account stemmed from a credit sale in November of last year.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 22	Allowance for Doubtful Account		498
	Accounts Receivable			498
	(Being write off of uncollectible accounts receivable is recorded)

Table(10)

Since, in allowance method of accounting for accounts receivable the amount for bad debt expense is deducted from allowance for doubtful account which is a contra asset account, it is debited when it s decreased.
Since, in allowance method of accounting for accounts receivable the deduction is made against the account receivable account which is an asset account, it is credited when it s decreased.

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Answer 5

Chapter 7, Problem 1PSB

To determine

Journal Entry:

It means record of financial data related to business transactions in a journal in a manner so that debit equals credit. It provides an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health.

Rules of Journal Entry:

Assets: Increase in asset should be debit and decrease should be credit.

Liabilities: Increase in liabilities should be credit and decrease should be debit.

Equity: Increase in Equity should be credit and decrease should be debit.

Expense: Increase in expense should be debit and decrease should be credit.

Revenue: Increase in revenue should be credit and decrease should be debit.

Credit Card:

It refers to the card made of plastic and issued by a bank. It provides an individual to buy goods and services on credit when they have shortage of cash.

Perpetual Inventory System:

It refers to the system to record the transaction related to inventories at the time of their occurrence. Each sale and purchase is recorded at the time they occurred.

To prepare: Journal entries for the given credit card sales transactions.

Expert Solution & Answer

Explanation of Solution

Aug 4 sold $3,700 of merchandise on credit (that had cost $2,000) to M.C.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 4	Accounts Receivables (M.C)		3,700
	Sales			3,700
	(Being sales of $650 on credit is recorded )

Table(1)

Since, the sales of merchandise on credit will increase the value of accounts receivables and accounts receivable is an asset account, it is debited when it is increased.
Since, the sales of merchandise would increase the value of sales in the company and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 4	Cost of Goods Sold		2,000
	Merchandise Inventory			2,000
	(Being cost of goods sold is recorded )

Table(2)

Since, the cost of merchandise sold is $2000 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 10 sold $5,200 of merchandise (that had cost $2,800) to customers who used their commerce bank credit card.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 10	Cash		5,044
	Credit Card Expense		156
	Sales			5,200
	(Being sales of $5,200 is recorded payment for which is made with MasterCard credit cards )

Table(3)

Since, payment with credit cards includes immediately recognition of cash to the company and cash is an asset account, it is debited when it is increased.
Since, payment with credit card includes some charges for the company and it is an expense account, it is debited when it is increased.
Since, sales of merchandise have been made and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 10	Cost of Goods Sold		2,800
	Merchandise Inventory			2,800
	(Being cost of goods sold is recorded )

Table(4)

Since, the cost of merchandise sold is $2,800 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 11 sold $1,250 of merchandise (that had cost $900) to customers who used their G.M cards.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 11	Cash		1,225
	Credit Card Expense		25
	Sales			1,250
	(Being sales of $1,250 is recorded payment for which is made with MasterCard credit cards )

Table(5)

Since, payment with credit cards includes immediately recognition of cash to the company and cash is an asset account, it is debited when it is increased.
Since, payment with credit card includes some charges for the company and it is an expense account, it is debited when it is increased.
Since, sales of merchandise have been made and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 11	Cost of Goods Sold		900
	Merchandise Inventory			900
	(Being cost of goods sold is recorded )

Table(6)

Since, the cost of merchandise sold is $900 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 14 received M.C’s check in full payment for payment for the purchase of Aug 4.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 14	Cash		3,700
	Account Receivable (M.C)			3,700
	(Being payment from an account receivable is recorded)

Table(7)

Since, payment from an accounts receivable will increase the cash and cash is an asset account, it is debited when it is increased.
Since, payment from an accounts receivable will decrease the accounts receivable and accounts receivable is an asset account, it is credited when it is decreased.

Aug 15 sold $3,250 of merchandise (that had cost $1,758) to customer who used their G.M cards.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 15	Cash		3,185
	Credit Card Expense		65
	Sales			3,250
	(Being sales of $3,250 is recorded payment for which is made with MasterCard credit cards )

Table(8)

Since, payment with credit cards includes immediately recognition of cash to the company and cash is an asset account, it is debited when it is increased.
Since, payment with credit card includes some charges for the company and it is an expense account, it is debited when it is increased.
Since, sales of merchandise have been made and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 15	Cost of Goods Sold		1,758
	Merchandise Inventory			1,758
	(Being cost of goods sold is recorded )

Table(9)

Since, the cost of merchandise sold is $2000 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 22 wrote off the account of C.C against the allowance for doubtful accounts. The $498 balance in C.C’s account stemmed from a credit sale in November of last year.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 22	Allowance for Doubtful Account		498
	Accounts Receivable			498
	(Being write off of uncollectible accounts receivable is recorded)

Table(10)

Since, in allowance method of accounting for accounts receivable the amount for bad debt expense is deducted from allowance for doubtful account which is a contra asset account, it is debited when it s decreased.
Since, in allowance method of accounting for accounts receivable the deduction is made against the account receivable account which is an asset account, it is credited when it s decreased.

Answer 6

Chapter 7, Problem 1PSB

To determine

Journal Entry:

It means record of financial data related to business transactions in a journal in a manner so that debit equals credit. It provides an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health.

Rules of Journal Entry:

Assets: Increase in asset should be debit and decrease should be credit.

Liabilities: Increase in liabilities should be credit and decrease should be debit.

Equity: Increase in Equity should be credit and decrease should be debit.

Expense: Increase in expense should be debit and decrease should be credit.

Revenue: Increase in revenue should be credit and decrease should be debit.

Credit Card:

It refers to the card made of plastic and issued by a bank. It provides an individual to buy goods and services on credit when they have shortage of cash.

Perpetual Inventory System:

It refers to the system to record the transaction related to inventories at the time of their occurrence. Each sale and purchase is recorded at the time they occurred.

To prepare: Journal entries for the given credit card sales transactions.

Expert Solution & Answer

Explanation of Solution

Aug 4 sold $3,700 of merchandise on credit (that had cost $2,000) to M.C.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 4	Accounts Receivables (M.C)		3,700
	Sales			3,700
	(Being sales of $650 on credit is recorded )

Table(1)

Since, the sales of merchandise on credit will increase the value of accounts receivables and accounts receivable is an asset account, it is debited when it is increased.
Since, the sales of merchandise would increase the value of sales in the company and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 4	Cost of Goods Sold		2,000
	Merchandise Inventory			2,000
	(Being cost of goods sold is recorded )

Table(2)

Since, the cost of merchandise sold is $2000 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 10 sold $5,200 of merchandise (that had cost $2,800) to customers who used their commerce bank credit card.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 10	Cash		5,044
	Credit Card Expense		156
	Sales			5,200
	(Being sales of $5,200 is recorded payment for which is made with MasterCard credit cards )

Table(3)

Since, payment with credit cards includes immediately recognition of cash to the company and cash is an asset account, it is debited when it is increased.
Since, payment with credit card includes some charges for the company and it is an expense account, it is debited when it is increased.
Since, sales of merchandise have been made and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 10	Cost of Goods Sold		2,800
	Merchandise Inventory			2,800
	(Being cost of goods sold is recorded )

Table(4)

Since, the cost of merchandise sold is $2,800 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 11 sold $1,250 of merchandise (that had cost $900) to customers who used their G.M cards.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 11	Cash		1,225
	Credit Card Expense		25
	Sales			1,250
	(Being sales of $1,250 is recorded payment for which is made with MasterCard credit cards )

Table(5)

Since, payment with credit cards includes immediately recognition of cash to the company and cash is an asset account, it is debited when it is increased.
Since, payment with credit card includes some charges for the company and it is an expense account, it is debited when it is increased.
Since, sales of merchandise have been made and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 11	Cost of Goods Sold		900
	Merchandise Inventory			900
	(Being cost of goods sold is recorded )

Table(6)

Since, the cost of merchandise sold is $900 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 14 received M.C’s check in full payment for payment for the purchase of Aug 4.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 14	Cash		3,700
	Account Receivable (M.C)			3,700
	(Being payment from an account receivable is recorded)

Table(7)

Since, payment from an accounts receivable will increase the cash and cash is an asset account, it is debited when it is increased.
Since, payment from an accounts receivable will decrease the accounts receivable and accounts receivable is an asset account, it is credited when it is decreased.

Aug 15 sold $3,250 of merchandise (that had cost $1,758) to customer who used their G.M cards.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 15	Cash		3,185
	Credit Card Expense		65
	Sales			3,250
	(Being sales of $3,250 is recorded payment for which is made with MasterCard credit cards )

Table(8)

Since, payment with credit cards includes immediately recognition of cash to the company and cash is an asset account, it is debited when it is increased.
Since, payment with credit card includes some charges for the company and it is an expense account, it is debited when it is increased.
Since, sales of merchandise have been made and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 15	Cost of Goods Sold		1,758
	Merchandise Inventory			1,758
	(Being cost of goods sold is recorded )

Table(9)

Since, the cost of merchandise sold is $2000 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 22 wrote off the account of C.C against the allowance for doubtful accounts. The $498 balance in C.C’s account stemmed from a credit sale in November of last year.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 22	Allowance for Doubtful Account		498
	Accounts Receivable			498
	(Being write off of uncollectible accounts receivable is recorded)

Table(10)

Since, in allowance method of accounting for accounts receivable the amount for bad debt expense is deducted from allowance for doubtful account which is a contra asset account, it is debited when it s decreased.
Since, in allowance method of accounting for accounts receivable the deduction is made against the account receivable account which is an asset account, it is credited when it s decreased.

Answer 7

Chapter 7, Problem 1PSB

To determine

Journal Entry:

It means record of financial data related to business transactions in a journal in a manner so that debit equals credit. It provides an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health.

Rules of Journal Entry:

Assets: Increase in asset should be debit and decrease should be credit.

Liabilities: Increase in liabilities should be credit and decrease should be debit.

Equity: Increase in Equity should be credit and decrease should be debit.

Expense: Increase in expense should be debit and decrease should be credit.

Revenue: Increase in revenue should be credit and decrease should be debit.

Credit Card:

It refers to the card made of plastic and issued by a bank. It provides an individual to buy goods and services on credit when they have shortage of cash.

Perpetual Inventory System:

It refers to the system to record the transaction related to inventories at the time of their occurrence. Each sale and purchase is recorded at the time they occurred.

To prepare: Journal entries for the given credit card sales transactions.

Answer 8

Expert Solution & Answer

Explanation of Solution

Aug 4 sold $3,700 of merchandise on credit (that had cost $2,000) to M.C.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 4	Accounts Receivables (M.C)		3,700
	Sales			3,700
	(Being sales of $650 on credit is recorded )

Table(1)

Since, the sales of merchandise on credit will increase the value of accounts receivables and accounts receivable is an asset account, it is debited when it is increased.
Since, the sales of merchandise would increase the value of sales in the company and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 4	Cost of Goods Sold		2,000
	Merchandise Inventory			2,000
	(Being cost of goods sold is recorded )

Table(2)

Since, the cost of merchandise sold is $2000 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 10 sold $5,200 of merchandise (that had cost $2,800) to customers who used their commerce bank credit card.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 10	Cash		5,044
	Credit Card Expense		156
	Sales			5,200
	(Being sales of $5,200 is recorded payment for which is made with MasterCard credit cards )

Table(3)

Since, payment with credit cards includes immediately recognition of cash to the company and cash is an asset account, it is debited when it is increased.
Since, payment with credit card includes some charges for the company and it is an expense account, it is debited when it is increased.
Since, sales of merchandise have been made and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 10	Cost of Goods Sold		2,800
	Merchandise Inventory			2,800
	(Being cost of goods sold is recorded )

Table(4)

Since, the cost of merchandise sold is $2,800 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 11 sold $1,250 of merchandise (that had cost $900) to customers who used their G.M cards.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 11	Cash		1,225
	Credit Card Expense		25
	Sales			1,250
	(Being sales of $1,250 is recorded payment for which is made with MasterCard credit cards )

Table(5)

Since, payment with credit cards includes immediately recognition of cash to the company and cash is an asset account, it is debited when it is increased.
Since, payment with credit card includes some charges for the company and it is an expense account, it is debited when it is increased.
Since, sales of merchandise have been made and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 11	Cost of Goods Sold		900
	Merchandise Inventory			900
	(Being cost of goods sold is recorded )

Table(6)

Since, the cost of merchandise sold is $900 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 14 received M.C’s check in full payment for payment for the purchase of Aug 4.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 14	Cash		3,700
	Account Receivable (M.C)			3,700
	(Being payment from an account receivable is recorded)

Table(7)

Since, payment from an accounts receivable will increase the cash and cash is an asset account, it is debited when it is increased.
Since, payment from an accounts receivable will decrease the accounts receivable and accounts receivable is an asset account, it is credited when it is decreased.

Aug 15 sold $3,250 of merchandise (that had cost $1,758) to customer who used their G.M cards.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 15	Cash		3,185
	Credit Card Expense		65
	Sales			3,250
	(Being sales of $3,250 is recorded payment for which is made with MasterCard credit cards )

Table(8)

Since, payment with credit cards includes immediately recognition of cash to the company and cash is an asset account, it is debited when it is increased.
Since, payment with credit card includes some charges for the company and it is an expense account, it is debited when it is increased.
Since, sales of merchandise have been made and sales is revenue account, it is credited when it is increased.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 15	Cost of Goods Sold		1,758
	Merchandise Inventory			1,758
	(Being cost of goods sold is recorded )

Table(9)

Since, the cost of merchandise sold is $2000 and company is using perpetual inventory system, it is debited.
Merchandise inventory account is debited as it is an asset account and it has decreased.

Aug 22 wrote off the account of C.C against the allowance for doubtful accounts. The $498 balance in C.C’s account stemmed from a credit sale in November of last year.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Aug 22	Allowance for Doubtful Account		498
	Accounts Receivable			498
	(Being write off of uncollectible accounts receivable is recorded)

Table(10)

Since, in allowance method of accounting for accounts receivable the amount for bad debt expense is deducted from allowance for doubtful account which is a contra asset account, it is debited when it s decreased.
Since, in allowance method of accounting for accounts receivable the deduction is made against the account receivable account which is an asset account, it is credited when it s decreased.