Asked by Abigail Costiniano on Jul 05, 2024
Verified
Yellowstone Stores accepts both its own and national credit cards. During the year the following selected summary transactions occurred.
Jan. 15 Made Yellowstone credit card sales totaling $28000. (There were no balances prior to January 15.)
20 Made Visa credit card sales (service charge fee 3%) totaling $5000.
Feb. 10 Collected $17000 on Yellowstone credit card sales.
15 Added finance charges of 1% to Yellowstone credit card balance.
Instructions
(a) Journalize the transactions for Yellowstone Stores.
(b) Indicate the statement presentation of the interest revenue and the credit card service charge expense for Yellowstone Stores.
Credit Card Sales
Transactions where customers purchase goods or services using a credit card as the payment method.
Service Charge Fee
A fee charged by a bank or financial institution for processing transactions or providing a specific service.
Finance Charges
The cost of borrowing money, including interest and other fees.
- Ability to journalize credit card transactions and recognize service charges and finance charges.
Verified Answer
MM
Michael MurrayJul 08, 2024
Final Answer :
(a)
Jan. 15 Accounts Receivable 28,000 Sales Revenue 28,00020 Cash($5,000−$150). 4,850 Service Charge Expense150 ($5,000×3%) Sales Revenue5,000\begin{array}{lll} \text { Jan. 15 } & \text { Accounts Receivable } &28,000\\& \text { Sales Revenue } &&28,000\\\\& \text {20 Cash\( (\$ 5,000-\$ 150) \). } &4,850\\& \text { Service Charge Expense} &150\\ &\text { \( (\$ 5,000 \times 3 \%) \) } &\\& \text { Sales Revenue} &&5,000\\\end{array} Jan. 15 Accounts Receivable Sales Revenue 20 Cash($5,000−$150). Service Charge Expense ($5,000×3%) Sales Revenue28,0004,85015028,0005,000
(b)
Feb 10 Cash. 17,000 Accounts Receivable 17,00015 Accounts Receivable ($11,000×1%) 110 Interest Revenue 110\begin{array}{lll} \text { Feb 10 } &\text {Cash. } &17,000\\ &\text { Accounts Receivable } &&17,000\\\\&15 \text { Accounts Receivable \( (\$ 11,000 \times 1 \%) \) } &110\\ &\text { Interest Revenue } &&110\\\end{array} Feb 10 Cash. Accounts Receivable 15 Accounts Receivable ($11,000×1%) Interest Revenue 17,00011017,000110
(b) Interest Revenue is reported under other revenues and gains.
Service Charge Expense is a selling expense.
Jan. 15 Accounts Receivable 28,000 Sales Revenue 28,00020 Cash($5,000−$150). 4,850 Service Charge Expense150 ($5,000×3%) Sales Revenue5,000\begin{array}{lll} \text { Jan. 15 } & \text { Accounts Receivable } &28,000\\& \text { Sales Revenue } &&28,000\\\\& \text {20 Cash\( (\$ 5,000-\$ 150) \). } &4,850\\& \text { Service Charge Expense} &150\\ &\text { \( (\$ 5,000 \times 3 \%) \) } &\\& \text { Sales Revenue} &&5,000\\\end{array} Jan. 15 Accounts Receivable Sales Revenue 20 Cash($5,000−$150). Service Charge Expense ($5,000×3%) Sales Revenue28,0004,85015028,0005,000
(b)
Feb 10 Cash. 17,000 Accounts Receivable 17,00015 Accounts Receivable ($11,000×1%) 110 Interest Revenue 110\begin{array}{lll} \text { Feb 10 } &\text {Cash. } &17,000\\ &\text { Accounts Receivable } &&17,000\\\\&15 \text { Accounts Receivable \( (\$ 11,000 \times 1 \%) \) } &110\\ &\text { Interest Revenue } &&110\\\end{array} Feb 10 Cash. Accounts Receivable 15 Accounts Receivable ($11,000×1%) Interest Revenue 17,00011017,000110
(b) Interest Revenue is reported under other revenues and gains.
Service Charge Expense is a selling expense.
Learning Objectives
- Ability to journalize credit card transactions and recognize service charges and finance charges.