Chapter 9, Problem 1APSA

To determine

Journal Entries:

Journal entries are used to record the transactions of an organization in a chronological order. Based on these journal entries, the amounts are posted to the relevant ledger accounts.

Accounting Rules for Journal Entries:

⮚ To increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains.

⮚ To decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains.

To prepare: Journal entries.

Explanation of Solution

The merchandise sold on credit:

Date	Account Title and Explanation	Post ref.	Debit ($)	Credit ($)
June 4	Accounts Receivables		650
	Sales			650
	(Record the credit sales)

Table (1)

• Account receivable account is an asset account and it record an increase, hence it is debited.

• Sales account is a revenue account, it records an increase, and hence it is credited.

Cost of goods sold:

Date	Account Title and Explanation	Post ref.	Debit ($)	Credit ($)
June 4	Cost of Goods Sold		400
	Merchandise Inventory			400
	(Record cost of goods sold)

Table (2)

• Cost of goods sold is an expense account, it records an increase, and hence it is debited.

• Merchandise inventory account is an asset account and it decreases, hence it is credited.

Sale of merchandise on credit:

Date	Account Title and Explanation	Post ref.	Debit ($)	Credit ($)
June 5	Cash		6,693
	Credit Card Expenses		207
	Sales			6,900
	(Record credit card sales less 3% fee )

Table (3)

• Cash account is an asset account and it record an increase, hence it is debited.

• Credit card expenses account is an expense account, it records an increase, and hence it is debited.

• Sales account is a revenue account, it records an increase, hence it is credited.

Cost of goods sold:

Date	Account Title and Explanation	Post ref.	Debit ($)	Credit ($)
June 5	Cost of Goods Sold		4,200
	Merchandise Inventory			4,200
	(Record cost of goods sold)

Table (4)

• Cost of goods sold is an expense account, it records an increase, and hence it is debited.

• Merchandise inventory account is an asset account and it decreases, hence it is credited.

Sale of merchandise on credit:

Date	Account Title and Explanation	Post ref.	Debit ($)	Credit ($)
June 6	Cash		5,733
	Credit Card Expenses		117
	Sales			5,850
	(Record credit card sales less 2% fee )

Table (5)

• Cash account is an asset account and it record an increase, hence it is debited.

• Credit card expenses account is an expense account, it records an increase, and hence it is debited.

• Sales account is a revenue account, it records an increase, and hence it is credited.

Cost of goods sold:

Date	Account Title and Explanation	Post ref.	Debit ($)	Credit ($)
June 6	Cost of Goods Sold		3,800
	Merchandise Inventory			3,800
	(Record cost of goods sold)

Table (6)

• Cost of goods sold is an expense account, it records an increase, and hence it is debited.

• Merchandise inventory account is an asset account and it decreases, hence it is credited.

Sale of merchandise on credit:

Date	Account Title and Explanation	Post ref.	Debit ($)	Credit ($)
June 6	Cash		4,263
	Credit Card Expenses		87
	Sales			4,350
	(Record credit card sales less 2% fee )

Table (7)

• Cash account is an asset account and it record an increase, hence it is debited.

• Credit card expenses account is an expense account, it records an increase, and hence it is debited.

• Sales account is a revenue account, it records an increase, and hence it is credited.

Cost of goods sold:

Date	Account Title and Explanation	Post ref.	Debit ($)	Credit ($)
June 8	Cost of Goods Sold		2,900
	Merchandise Inventory			2,900
	(Record cost of goods sold)

Table (8)

• Cost of goods sold is an expense account, it records an increase, and hence it is debited.

• Merchandise inventory account is an asset account and it decreases, hence it is credited.

Write off an uncollectible account:

Date	Account Title and Explanation	Post ref.	Debit ($)	Credit ($)
June 13	Allowance for Doubtful Accounts		429
	Accounts Receivables			429
	(Write off an uncollectible accounts)

Table (9)

• Allowance for doubtful account is a contra asset account and it reduces the accounts receivable account to its realizable value, hence it is debited.

• Account receivable account is an asset account and it record a decrease, hence it is credited.

Payment received from debtor:

Date	Account Title and Explanation	Post ref.	Debit ($)	Credit ($)
June 18	Cash		650
	Accounts Receivables			650
	(Write off an uncollectible accounts)

Table (10)

• Cash account is an asset account and it record an increase, hence it is debited.

• Account receivable account is an asset account and it record a decrease, hence it is credited.