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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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Sales-related transactions, including the use of credit cards

Journalize the entries for the following transactions:

a. Sold merchandise for cash, $30,000. The cost of the merchandise sold was $18,000.

b. Sold merchandise on account, $258,000. The cost of the merchandise sold was $154,800.

c. Sold merchandise to customers who used MasterCard and VISA, $160 ,000. The cost of the merchandise sold was $96,000.

d. Sold merchandise to customers who used American Express, $72,000. The cost of the merchandise sold was $43,200.

e. Received an invoice from National Clearing House Credit Co. for $8,800, representing a service fee paid for processing MasterCard, VISA, and American Express sales.

To determine

Sales is an activity of selling the merchandise inventory of a business.

To Record: The sale transactions of the company.

Explanation
  1. a. Record the journal entry for the sale of inventory for cash.
Date Accounts and Explanation Debit ($) Credit ($)
  Cash 30,000  
  To Sales Revenue   30,000
  (To record the sale of inventory for cash)    

Table (1)

  • Cash is an asset and it is increased by $30,000. Therefore, debit cash account with $30,000.
  • Sales revenue is revenue and it increases the value of equity by $30,000. Therefore, credit sales revenue with $30,000.

Record the journal entry for cost of goods sold.

Date Accounts and Explanation Debit ($) Credit ($)
  Cost of Merchandise Sold 18,000  
  Merchandise Inventory   18,000
  (To record the cost of goods sold)    

Table (2)

  • Cost of merchandise sold is an expense account and it decreases the value of equity by $18,000. Therefore, debit cost of merchandise sold account with $18,000.
  • Merchandise Inventory is an asset and it is decreased by $18,000. Therefore, credit inventory account with $18,000.
  1. b. Record the journal entry for the sale of inventory on account.
Date Accounts and Explanation Debit ($) Credit ($)
  Accounts receivable 258,000  
  To Sales Revenue   258,000
  (To record the sale of inventory on account)    

Table (3)

  • Accounts Receivable is an asset and it is increased by $258,000. Therefore, debit accounts receivable with $258,000.
  • Sales revenue is revenue and it increases the value of equity by $258,000. Therefore, credit sales revenue with $258,000.

Record the journal entry for cost of goods sold.

Date Accounts and Explanation Debit ($) Credit ($)
  Cost of Merchandise Sold 154,800  
  Merchandise Inventory   154,800
  (To record the cost of goods sold)    

Table (4)

  • Cost of merchandise sold is an expense account and it decreases the value of equity by $154,800. Therefore, debit cost of merchandise sold account with $154,800.
  • Merchandise Inventory is an asset and it is decreased by $154,800. Therefore, credit inventory account with $154,800.
  1. c. Record the journal entry for the sale of inventory for cash.
Date Accounts and Explanation Debit ($) Credit ($)
  Cash 160,000  
  To Sales Revenue   160,000
  (To record the sale of inventory for cash)    

Table (5)

  • Cash is an asset and it is increased by $160,000...

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