Concept explainers
(a)
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.
Note receivable:
Note receivable refers to a written promise for the amounts to be received within a stipulated period of time. This written promise is issued by a debtor or borrower to lender or creditor. Notes receivable is an asset of a business.
Credit card sales:
Credit card is an electronic card, which allows the credit card holders to buy something on credit at convenience 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.
Procedure for debiting and crediting an account in
- Increase in assets account, increase in expenses account, and decrease in liabilities account should be debited.
- Decrease in assets account, increase in revenue account, and increase in liabilities account should be credited.
To prepare: The journal entry in the books of Company M for the transactions made in the month of July.
(b)
To
(c)
To show: The
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