Asked by Victoria Hines on Jun 01, 2024
Verified
On January 6 Whitson Co. sells merchandise on account to Garcia Inc. for $7000 terms 2/10 n/30. On January 16 Garcia Inc. pays the amount due. Prepare the entries on Whitson's books to record the sale and related collection.
(b) On January 10 Jill Hoyle uses her Berkman Co. credit card to purchase merchandise from Berkman Co. for $9000. On February 10 Hoyle is billed for the amount due of $9000. On February 12 Hoyle pays $4000 on the balance due. On March 10 Hoyle is billed for the amount due including interest at 2% per month on the unpaid balance as of February 12. Prepare the entries on Berkman Co.'s books related to the transactions that occurred on January 10 February 12 and March 10.
Credit Sales
Sales made on credit where the payment is received after the service is delivered or the product is sold, thus creating receivables.
Credit Card Service Charge
Fees charged by credit card providers for processing transactions.
- Attain the ability to perform calculations related to finance and service charges and discern their implications on the management of receivables.
Verified Answer
ZK
Zybrea KnightJun 05, 2024
Final Answer :
(a)
Jan. 6 Accounts Receivable-Garcia. 7,000 Sales Revenue 7,00016 Cash ($7,000−$140) 6,860 Sales Discounts (2%×$7,000) 140 Accounts Receivable-Garcia 7,000\begin{array}{lll} \text {Jan. 6 } & \text {Accounts Receivable-Garcia. } &7,000\\ &\text { Sales Revenue } &&7,000\\ \text {\quad\quad16 } & \text { Cash \( (\$ 7,000-\$ 140) \) } &6,860\\& \text { Sales Discounts \( (2 \% \times \$ 7,000) \) } &140\\& \text { Accounts Receivable-Garcia } &&7,000\\\end{array}Jan. 6 16 Accounts Receivable-Garcia. Sales Revenue Cash ($7,000−$140) Sales Discounts (2%×$7,000) Accounts Receivable-Garcia 7,0006,8601407,0007,000
(b)
Jan. 10 Accounts Receivable-Hoyle 9,000 Sales Revenue9,000 Feb. 12 Cash4,000 Accounts Receivable-Hoyle4,000 Mar. 10Accounts Receivable-Hoyle 100Interest Revenue100[2%×($9.000−$4.000)]\begin{array}{lll} \text { Jan. } 10 & \text { Accounts Receivable-Hoyle } &9,000\\&\text { Sales Revenue}& & 9,000 \\\\ \text { Feb. } 12 & \text { Cash} & 4,000 \\&\text { Accounts Receivable-Hoyle}&&4,000\\\\ \text { Mar. } 10 &\text {Accounts Receivable-Hoyle } & 100 \\&\text {Interest Revenue}&&100\\& \text {\( [2 \% \times(\$ 9.000-\$ 4.000)] \)}\end{array} Jan. 10 Feb. 12 Mar. 10 Accounts Receivable-Hoyle Sales Revenue Cash Accounts Receivable-HoyleAccounts Receivable-Hoyle Interest Revenue[2%×($9.000−$4.000)]9,0004,0001009,0004,000100
Jan. 6 Accounts Receivable-Garcia. 7,000 Sales Revenue 7,00016 Cash ($7,000−$140) 6,860 Sales Discounts (2%×$7,000) 140 Accounts Receivable-Garcia 7,000\begin{array}{lll} \text {Jan. 6 } & \text {Accounts Receivable-Garcia. } &7,000\\ &\text { Sales Revenue } &&7,000\\ \text {\quad\quad16 } & \text { Cash \( (\$ 7,000-\$ 140) \) } &6,860\\& \text { Sales Discounts \( (2 \% \times \$ 7,000) \) } &140\\& \text { Accounts Receivable-Garcia } &&7,000\\\end{array}Jan. 6 16 Accounts Receivable-Garcia. Sales Revenue Cash ($7,000−$140) Sales Discounts (2%×$7,000) Accounts Receivable-Garcia 7,0006,8601407,0007,000
(b)
Jan. 10 Accounts Receivable-Hoyle 9,000 Sales Revenue9,000 Feb. 12 Cash4,000 Accounts Receivable-Hoyle4,000 Mar. 10Accounts Receivable-Hoyle 100Interest Revenue100[2%×($9.000−$4.000)]\begin{array}{lll} \text { Jan. } 10 & \text { Accounts Receivable-Hoyle } &9,000\\&\text { Sales Revenue}& & 9,000 \\\\ \text { Feb. } 12 & \text { Cash} & 4,000 \\&\text { Accounts Receivable-Hoyle}&&4,000\\\\ \text { Mar. } 10 &\text {Accounts Receivable-Hoyle } & 100 \\&\text {Interest Revenue}&&100\\& \text {\( [2 \% \times(\$ 9.000-\$ 4.000)] \)}\end{array} Jan. 10 Feb. 12 Mar. 10 Accounts Receivable-Hoyle Sales Revenue Cash Accounts Receivable-HoyleAccounts Receivable-Hoyle Interest Revenue[2%×($9.000−$4.000)]9,0004,0001009,0004,000100
Learning Objectives
- Attain the ability to perform calculations related to finance and service charges and discern their implications on the management of receivables.