
Concept explainers
Prepare the journal entries to record the LP transactions.

Explanation of Solution
Prepare the journal entries to record the sales for an account.
Date | Account Title and Explanation |
Debit ($) |
Credit ($) |
May 15 | 1,200 | ||
Sales Revenue | 1,200 | ||
(To record the sales on account) |
Table (1)
- Accounts receivable is a current asset, and it is increased. Therefore, debit accounts receivable account for $1,200.
- Sales revenue is a component of
stockholders’ equity , and it is increased. Therefore, credit sales revenue account for $1,200.
Prepare the
Date | Account Title and Explanation |
Debit ($) |
Credit ($) |
May 15 | Cost of Goods Sold | 800 | |
Merchandised Inventory | 800 | ||
(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 $800.
- Merchandise inventory is a current asset, and it is decreased. Therefore, credit merchandise inventory account for $800.
Prepare the journal entry to record sales on account.
Date | Account Title and Explanation |
Debit ($) |
Credit ($) |
May 16 | Accounts Receivable | 20,000 | |
Sales Revenue | 20,000 | ||
(To record the sales on account) |
Table (3)
- Accounts receivable is a current asset, and it is increased. Therefore, debit accounts receivable account for $20,000.
- Sales revenue is a component of stockholders’ equity, and it is increased. Therefore, credit sales revenue account for $20,000.
Prepare the journal entry to record cost of goods sold.
Date | Account Title and Explanation |
Debit ($) |
Credit ($) |
May 16 | Cost of Goods Sold | 13,000 | |
Merchandised Inventory | 13,000 | ||
(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 $13,000.
- Merchandise inventory is a current asset, and it is decreased. Therefore, credit merchandise inventory account for $13,000.
Prepare the journal entry to record credit card sale (subsequent collection)) of $2,400 of processor fee of 2%.
Date | Account Title and Explanation |
Debit ($) | Credit ($) |
May 18 | Accounts receivable - UM | 2,352 | |
Credit card expense | 48 | ||
Sales Revenue | 2,400 | ||
(To record the credit card sales.) |
Table (5)
Calculate the processor fee.
Calculate accounts receivable.
- Accounts receivable is a current asset, and it is increased. Therefore, debit accounts receivable account for $2,352.
- 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 $2,400.
Prepare the journal entry to record cost of goods sold.
Date | Account Title and Explanation |
Debit ($) |
Credit ($) |
May 18 | Cost of Goods Sold | 1,400 | |
Merchandised Inventory | 1,400 | ||
(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 $1,400.
- Merchandise inventory is a current asset, and it is decreased. Therefore, credit merchandise inventory account for $1,400.
Prepare the journal entry to record credit card sale (immediate credit) of $10,000 of processor fee of 2%.
Date | Account Title and Explanation |
Debit ($) | Credit ($) |
May 19 | Cash | 9,800 | |
Credit card expense | 200 | ||
Sales Revenue | 10,000 | ||
(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 $9,800.
- Credit card expense is a component of stockholders’ equity, and it is decreased. Therefore, debit credit card expense account for $200.
- Sales revenue is a component of stockholders’ equity, and it is increased. Therefore, credit sales revenue account for $10,000.
Prepare the journal entry to record cost of goods sold for $6,000.
Date | Account Title and Explanation |
Debit ($) |
Credit ($) |
June 5 | Cost of Goods Sold | 6,000 | |
Merchandised Inventory | 6,000 | ||
(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 $6,000.
- Merchandise inventory is a current asset, and it is decreased. Therefore, credit merchandise inventory account for $6,000.
Prepare the journal entry to record for received cash payment from L.
Date | Account Title and Explanation |
Debit ($) |
Credit ($) |
June 6 | Cash | 19,600 | |
Sales Discount | 400 | ||
Accounts Receivable | 20,000 | ||
(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 $19,600.
- Sales discount is a component of stockholders’ equity, and it is decreased. Therefore, debit sales discount for $400.
- Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $20,000.
Prepare the journal entry to record for received cash payment from UM.
Date | Account Title and Explanation |
Debit ($) | Credit ($) |
June 7 | Cash | 2,352 | |
Accounts receivable - UM | 2,352 | ||
(To record the collection from credit card company.) |
Table (10)
- Cash is a current asset, and it is increased. Therefore, debit cash account for $2,352.
- Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $2,352.
Want to see more full solutions like this?
Chapter 8 Solutions
Financial Accounting for Undergraduates
- I am looking for the correct answer to this accounting question with appropriate explanations.arrow_forwardI am searching for the accurate solution to this financial accounting problem with the right approach.arrow_forwardI am looking for the correct answer to this general accounting problem using valid accounting standards.arrow_forward
- Hello tutor please given General accounting question answer do fast and properly explain all answerarrow_forwardChalmers Corporation operates in multiple areas of the globe, and relatively large price changes are common. Presently, the company sells 110,200 units for $50 per unit. The variable production costs are $20, and fixed costs amount to $2,079,500. Production engineers have advised management that they expect unit labor costs to rise by 10 percent and unit materials costs to rise by 15 percent in the coming year. Of the $20 variable costs, 25 percent are from labor and 50 percent are from materials. Variable overhead costs are expected to increase by 20 percent. Sales prices cannot increase more than 12 percent. It is also expected that fixed costs will rise by 10 percent as a result of increased taxes and other miscellaneous fixed charges. The company wishes to maintain the same level of profit in real dollar terms. It is expected that to accomplish this objective, profits must increase by 8 percent during the year. Required: Compute the volume in units and the dollar sales level…arrow_forwardAfter describing a threat/risk in either the revenue cycle (i.e., in sales and cash collection activities) or the expenditure cycle (i.e., in purchases or cash disbursement activities). What are specific internal controls that might be applied to mitigate each of the threats we've identified?arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





