
Prepare the journal entries to record the LKG transactions.

Explanation of Solution
Prepare the journal entries to record the sales for an account.
Date | Account Title and Explanation |
Debit ($) |
Credit ($) |
June 1 | Accounts Receivable | 1,600 | |
Sales Revenue | 1,600 | ||
(To record the sales on account) |
Table (1)
- Accounts receivable is a current asset, and it is increased. Therefore, debit accounts receivable account for $1,600.
- Sales revenue is a component of
stockholders’ equity , and it is increased. Therefore, credit sales revenue account for $1,600.
Prepare the
Date | Account Title and Explanation |
Debit ($) |
Credit ($) |
June 1 | Cost of Goods Sold | 1,000 | |
Merchandised Inventory | 1,000 | ||
(To record the cost of goods sold) |
Table (2)
- Cost of goods sold is a component of stockholders’ equity and it is decreased. Therefore, debit cost of goods sold account for $1,000.
- Merchandise inventory is a current asset, and it is decreased. Therefore, credit merchandise inventory account for $1,000.
Prepare the journal entry to record credit card sale (subsequent collection)) of $4,800 of processor fee of 1%.
Date | Account Title and Explanation |
Debit ($) | Credit ($) |
June 2 | Accounts receivable - UM | 4,752 | |
Credit card expense | 48 | ||
Sales Revenue | 4,800 | ||
(To record the credit card sales.) |
Table (3)
Calculate the processor fee.
Calculate accounts receivable.
- Accounts receivable is a current asset, and it is increased. Therefore, debit accounts receivable account for $4,752.
- Credit card expense is a component of stockholders’ equity, and it is decreased. Therefore, debit credit card expense account for $48.
- Sales revenue is a component of stockholders’ equity, and it is increased. Therefore, credit sales revenue account for $4,800.
Prepare the journal entry to record cost of goods sold.
Date | Account Title and Explanation |
Debit ($) |
Credit ($) |
June 2 | Cost of Goods Sold | 3,000 | |
Merchandised Inventory | 3,000 | ||
(To record the cost of goods sold) |
Table (4)
- Cost of goods sold is a component of stockholders’ equity and it is decreased. Therefore, debit cost of goods sold account for $3,000.
- Merchandise inventory is a current asset, and it is decreased. Therefore, credit merchandise inventory account for $3,000.
Prepare the journal entry to record sales of $3,600 oil painting to R who paid check.
Date | Account Title and Explanation |
Debit ($) |
Credit ($) |
June 4 | Cash | 3,600 | |
Sales Revenue | 3,600 | ||
(To record cash sales) |
Table (5)
- Cash is a current asset, and it is increased. Therefore, debit cash account for $3,600.
- Sales revenue is a component of stockholders’ equity, and it is increased. Therefore, credit sales revenue account for $3,600.
Prepare the journal entry to record for cost of goods sold.
Date | Account Title and Explanation |
Debit ($) |
Credit ($) |
June 4 | Cost of Goods Sold | 2,000 | |
Merchandised Inventory | 2,000 | ||
(To record the cost of goods sold) |
Table (6)
- Cost of goods sold is a component of stockholders’ equity and it is decreased. Therefore, debit cost of goods sold account for $2,000.
- Merchandise inventory is a current asset, and it is decreased. Therefore, credit merchandise inventory account for $2,000.
Prepare the journal entry to record credit card sale (immediate credit) of $4,000 of processor fee of 2%.
Date | Account Title and Explanation |
Debit ($) | Credit ($) |
June 5 | Cash | 3,920 | |
Credit card expense | 80 | ||
Sales Revenue | 4,000 | ||
(To record the credit card sale.) |
Table (7)
Working notes:
Calculate processor fee.
Calculate accounts receivable.
- Cash is a current asset, and it is increased. Therefore, debit cash account for $3,920.
- Credit card expense is a component of stockholders’ equity, and it is decreased. Therefore, debit credit card expense account for $80.
- Sales revenue is a component of stockholders’ equity, and it is increased. Therefore, credit sales revenue account for $4,000.
Prepare the journal entry to record cost of goods sold for $2,600.
Date | Account Title and Explanation |
Debit ($) |
Credit ($) |
June 5 | Cost of Goods Sold | 2,600 | |
Merchandised Inventory | 2,600 | ||
(To record the cost of goods sold) |
Table (8)
- Cost of goods sold is a component of stockholders’ equity and it is decreased. Therefore, debit cost of goods sold account for $2,600.
- Merchandise inventory is a current asset, and it is decreased. Therefore, credit merchandise inventory account for $2,600.
Prepare the journal entry to record for received cash payment from L.
Date | Account Title and Explanation |
Debit ($) |
Credit ($) |
June 6 | Cash | 1,568 | |
Sales Discount | 32 | ||
Accounts Receivable | 1,600 | ||
(To record the receipt of cash from L) |
Table (9)
Working notes:
Calculate sales discount.
Calculate cash received.
- Cash is a current asset, and it is increased. Therefore, debit cash account for $1,568.
- Sales discount is a component of stockholders’ equity, and it is decreased. Therefore, debit sales discount for $32.
- Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $1,600.
Prepare the journal entry to record for received cash payment from UM.
Date | Account Title and Explanation |
Debit ($) | Credit ($) |
June 7 | Cash | 4,752 | |
Accounts receivable - UM | 4,752 | ||
(To record the collection from credit card company.) |
Table (10)
- Cash is a current asset, and it is increased. Therefore, debit cash account for $4,752.
- Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $4,752.
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Chapter 8 Solutions
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