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 the 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 8.7BE

(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 the 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 L to record the sale of accounts receivable.

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Answer 2

Question

Chapter 8, Problem 8.7BE

(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 the 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 L to record the sale of accounts receivable.

Expert Solution & Answer

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Answer 3

Question

Chapter 8, Problem 8.7BE

(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 the 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 L to record the sale of accounts receivable.

Expert Solution & Answer

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Answer 4

Question

Chapter 8, Problem 8.7BE

(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 the 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 L to record the sale of accounts receivable.

Expert Solution & Answer

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See solution

Answer 5

Chapter 8, Problem 8.7BE

(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 the 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 L to record the sale of accounts receivable.

Answer 6

Chapter 8, Problem 8.7BE

(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 the 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 8.7BE

(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 the 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 L to record the sale of accounts receivable.

Answer 9

(b)

To determine

To prepare: The journal entry in the books of Company L 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 - Prob. 1Q Ch. 8 - Prob. 2Q Ch. 8 - Prob. 3Q Ch. 8 - Prob. 4Q Ch. 8 - Prob. 5Q Ch. 8 - Prob. 6Q Ch. 8 - Prob. 7Q Ch. 8 - Prob. 8Q Ch. 8 - Prob. 9Q Ch. 8 - Prob. 10Q

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

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