Chapter 9, Problem 1BPSB

To determine

Concept Introduction:

Credit and debit card sales:

In case of sales through credit or debit card the company usually hires a third party that processes the transactions and company keeps a card scanner to initiate the transaction. The type of transaction depends upon the card used. The third party charges processing fees for processing the payments and crediting amount in the account of the seller company.

To Prepare:

The Journal entries for the given transactions

Answer to Problem 1BPSB

The Journal entries for the given transactions are as follows:

Archer Company
Journal entries
Date	Account titles	Debit	Credit
Aug. 4	Accounts receivable- Mckenzie Carpenter	$ 3,700.00
	Sales Revenue		$ 3,700.00
	Cost of Goods Sold	$ 2,000.00
	Merchandise Inventory		$ 2,000.00
Aug. 10	Cash	$ 5,044.00
	Credit Card fees	$ 156.00
	Sales Revenue		$ 5,200.00
	Cost of Goods Sold	$ 2,800.00
	Merchandise Inventory		$ 2,800.00
Aug. 11	Cash	$ 1,225.00
	Credit Card fees	$25.00
	Sales Revenue		$ 1,250.00
	Cost of Goods Sold	$ 900.00
	Merchandise Inventory		$ 900.00
Aug. 14	Cash	$ 3,700.00
	Accounts receivable- Mckenzie Carpenter		$ 3,700.00
	(Being payment received in full )
Aug. 15	Cash	$ 3,185.00
	Credit Card fees	$65.00
	Sales Revenue		$ 3,250.00
	Cost of Goods Sold	$ 1,758.00
	Merchandise Inventory		$ 1,758.00
Aug. 22	Allowance for doubtful accounts	$ 498.00
	Accounts Receivable- Craw Co.		$ 498.00

Explanation of Solution

The Journal entries for the given transactions are explained as follows:

Archer Company
Journal entries
Date	Account titles	Debit	Credit
Aug. 4	Accounts receivable- Mckenzie Carpenter	$ 3,700.00
	Sales Revenue		$ 3,700.00
	(Being merchandise sold on account)
	Cost of Goods Sold	$ 2,000.00
	Merchandise Inventory		$ 2,000.00
	(Being merchandise sold)
Aug. 10	Cash (5200-156)	$ 5,044.00
	Credit Card fees (5200*3%)	$ 156.00
	Sales Revenue		$ 5,200.00
	(Being merchandise sold on credit card)
	Cost of Goods Sold	$ 2,800.00
	Merchandise Inventory		$ 2,800.00
	(Being merchandise sold)
Aug. 11	Cash (1250-25)	$ 1,225.00
	Credit Card fees (1250*2%)	$25.00
	Sales Revenue		$ 1,250.00
	(Being merchandise sold on credit card)
	Cost of Goods Sold	$ 900.00
	Merchandise Inventory		$ 900.00
	(Being merchandise sold)
Aug. 14	Cash	$ 3,700.00
	Accounts receivable- Mckenzie Carpenter		$ 3,700.00
	(Being payment received in full )
Aug. 15	Cash (3250-65)	$ 3,185.00
	Credit Card fees (3250*2%)	$65.00
	Sales Revenue		$ 3,250.00
	(Being merchandise sold on credit card)
	Cost of Goods Sold	$ 1,758.00
	Merchandise Inventory		$ 1,758.00
	(Being merchandise sold)
Aug. 22	Allowance for doubtful accounts	$ 498.00
	Accounts Receivable- Craw Co.		$ 498.00
	(Being uncollectible account written off)