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.
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Chapter 9 Solutions
FUNDAMENTAL ACCT PRIN TEXT+CONNECT CODE
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