Credit card sales Credit card is an electronic card, which allows the credit card holders to buy something on credit conveniently, and without paying immediate cash. Businesses allow customers to buy its products through bank credit cards, such sales are termed as credit card sales. For such convenience, bank charges some percentage as service charge expense on the total value of goods or services purchased on credit. Accounts receivable : Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business. Sale of receivables to a factor: Receivables can be liquidated by selling the receivables to a factor such as financial institutions or bankers by losing some percentage of receivables as fees (Service charge expense), before its maturity period. Factors will collect cash on receivables directly from the respective customers at its maturity. To prepare: The journal entry in the books of Restaurant T to record the acceptance of credit card payment upon sales.

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Answer 1

Question

Chapter 8, Problem 8.6BE

(a)

To determine

Credit card sales

Credit card is an electronic card, which allows the credit card holders to buy something on credit conveniently, and without paying immediate cash.

Businesses allow customers to buy its products through bank credit cards, such sales are termed as credit card sales. For such convenience, bank charges some percentage as service charge expense on the total value of goods or services purchased on credit.

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Sale of receivables to a factor:

Receivables can be liquidated by selling the receivables to a factor such as financial institutions or bankers by losing some percentage of receivables as fees (Service charge expense), before its maturity period. Factors will collect cash on receivables directly from the respective customers at its maturity.

To prepare: The journal entry in the books of Restaurant T to record the acceptance of credit card payment upon sales.

(b)

To determine

To prepare: The journal entry in the books of Company M to record the sale of accounts receivable.

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[The following information applies to the questions displayed below.] Raleigh Department Store uses the conventional retail method for the year ended December 31, 2022. Available information follows: The inventory at January 1, 2022, had a retail value of $45,000 and a cost of $27,500 based on the conventional retail method. Transactions during 2022 were as follows: CostRetailGross purchases$ 282,000S 490,000 Purchase returns 6,50010,000 Purchase discounts 5,000 Sales 492,000Sales returns 5,000 Employee discounts 3,000 Freight - in26, 500 Net markups 25,000Net markdowns 10,000 Sales to employees are recorded net of discounts. The retail value of the December 31, 2023, inventory was $56, 100, the cost-to-retail percentage for 2023 under the LIFO retail method was 62 %, and the appropriate price index was 102% of the January 1, 2023, price level. The retail value of the December 31, 2024, inventory was $48, 300, the cost-to-retail percentage for 2024 under the LIFO retail method was 61…

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Answer 2

Question

Chapter 8, Problem 8.6BE

(a)

To determine

Credit card sales

Credit card is an electronic card, which allows the credit card holders to buy something on credit conveniently, and without paying immediate cash.

Businesses allow customers to buy its products through bank credit cards, such sales are termed as credit card sales. For such convenience, bank charges some percentage as service charge expense on the total value of goods or services purchased on credit.

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Sale of receivables to a factor:

Receivables can be liquidated by selling the receivables to a factor such as financial institutions or bankers by losing some percentage of receivables as fees (Service charge expense), before its maturity period. Factors will collect cash on receivables directly from the respective customers at its maturity.

To prepare: The journal entry in the books of Restaurant T to record the acceptance of credit card payment upon sales.

(b)

To determine

To prepare: The journal entry in the books of Company M to record the sale of accounts receivable.

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Answer 3

Question

Chapter 8, Problem 8.6BE

(a)

To determine

Credit card sales

Credit card is an electronic card, which allows the credit card holders to buy something on credit conveniently, and without paying immediate cash.

Businesses allow customers to buy its products through bank credit cards, such sales are termed as credit card sales. For such convenience, bank charges some percentage as service charge expense on the total value of goods or services purchased on credit.

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Sale of receivables to a factor:

Receivables can be liquidated by selling the receivables to a factor such as financial institutions or bankers by losing some percentage of receivables as fees (Service charge expense), before its maturity period. Factors will collect cash on receivables directly from the respective customers at its maturity.

To prepare: The journal entry in the books of Restaurant T to record the acceptance of credit card payment upon sales.

(b)

To determine

To prepare: The journal entry in the books of Company M to record the sale of accounts receivable.

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Answer 4

Question

Chapter 8, Problem 8.6BE

(a)

To determine

Credit card sales

Credit card is an electronic card, which allows the credit card holders to buy something on credit conveniently, and without paying immediate cash.

Businesses allow customers to buy its products through bank credit cards, such sales are termed as credit card sales. For such convenience, bank charges some percentage as service charge expense on the total value of goods or services purchased on credit.

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Sale of receivables to a factor:

Receivables can be liquidated by selling the receivables to a factor such as financial institutions or bankers by losing some percentage of receivables as fees (Service charge expense), before its maturity period. Factors will collect cash on receivables directly from the respective customers at its maturity.

To prepare: The journal entry in the books of Restaurant T to record the acceptance of credit card payment upon sales.

(b)

To determine

To prepare: The journal entry in the books of Company M to record the sale of accounts receivable.

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Answer 5

Chapter 8, Problem 8.6BE

(a)

To determine

Credit card sales

Credit card is an electronic card, which allows the credit card holders to buy something on credit conveniently, and without paying immediate cash.

Businesses allow customers to buy its products through bank credit cards, such sales are termed as credit card sales. For such convenience, bank charges some percentage as service charge expense on the total value of goods or services purchased on credit.

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Sale of receivables to a factor:

Receivables can be liquidated by selling the receivables to a factor such as financial institutions or bankers by losing some percentage of receivables as fees (Service charge expense), before its maturity period. Factors will collect cash on receivables directly from the respective customers at its maturity.

To prepare: The journal entry in the books of Restaurant T to record the acceptance of credit card payment upon sales.

(b)

To determine

To prepare: The journal entry in the books of Company M to record the sale of accounts receivable.

Answer 6

Chapter 8, Problem 8.6BE

(a)

To determine

Credit card sales

Credit card is an electronic card, which allows the credit card holders to buy something on credit conveniently, and without paying immediate cash.

Businesses allow customers to buy its products through bank credit cards, such sales are termed as credit card sales. For such convenience, bank charges some percentage as service charge expense on the total value of goods or services purchased on credit.

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Sale of receivables to a factor:

Receivables can be liquidated by selling the receivables to a factor such as financial institutions or bankers by losing some percentage of receivables as fees (Service charge expense), before its maturity period. Factors will collect cash on receivables directly from the respective customers at its maturity.

To prepare: The journal entry in the books of Restaurant T to record the acceptance of credit card payment upon sales.

Answer 7

Chapter 8, Problem 8.6BE

(a)

To determine

Credit card sales

Credit card is an electronic card, which allows the credit card holders to buy something on credit conveniently, and without paying immediate cash.

Businesses allow customers to buy its products through bank credit cards, such sales are termed as credit card sales. For such convenience, bank charges some percentage as service charge expense on the total value of goods or services purchased on credit.

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Sale of receivables to a factor:

Receivables can be liquidated by selling the receivables to a factor such as financial institutions or bankers by losing some percentage of receivables as fees (Service charge expense), before its maturity period. Factors will collect cash on receivables directly from the respective customers at its maturity.

To prepare: The journal entry in the books of Restaurant T to record the acceptance of credit card payment upon sales.

Answer 8

(b)

To determine

To prepare: The journal entry in the books of Company M to record the sale of accounts receivable.

Answer 9

(b)

To determine

To prepare: The journal entry in the books of Company M to record the sale of accounts receivable.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 8 - What is the difference between an account...Ch. 8 - What are some common types of receivables other...Ch. 8 - What are the essential features of the allowance...Ch. 8 - Prob. 4Q Ch. 8 - Prob. 5Q Ch. 8 - Prob. 6Q Ch. 8 - Prob. 7Q Ch. 8 - Tawnya Dobbs, the vice president of sales for...Ch. 8 - Prob. 9Q Ch. 8 - Prob. 10Q

Solution Summary: The author explains that a credit card is an electronic card that allows customers to buy goods or services on credit without paying immediate cash.

Concept explainers

To prepare: The journal entry in the books of Company M to record the sale of accounts receivable.

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Chapter 8 Solutions