Chapter 7, Problem 1PSA

Sales on account and credit card sales C1

Mayfair Co. allows select customers to make purchases on credit. Its other customers can use either of two credit cards: Zisa or Barclay. Zisa deducts a 3% service charge for sales on its credit card and transfers funds to the bank account of Mayfair immediately upon receiving the credit card sales data. Barclay deducts a 2% service charge and transfers the funds to Mayfair within to 8 business days. Mayfair batches the Zisa and the Barclay credit card sales data daily to the card companies. Mayfair completes the following transactions in June.

June 4          Sold $650 of merchandise (that had cost $400) on credit to Natara Morris.

5          Sold $6,900 of merchandise (that had cost $4,200) to customers who used their Zisa cards.

6          Sold $5,850 of merchandise (that had cost $3,800) to customers who used their Barclay cards.

8 Sold $4,350 of merchandise (that had cost $2,900) to customers who used their Barclay cards.

13          Wrote off the account of Abigail McKee against the Allowance for Doubtful Accounts.

The $429 balance in McKee’s account stemmed from a credit sale in October of last year.

17 Received the transferred funds owed from Barclay for the June 6 and June 8 transactions.

18          Received Morris’s check in full payment for the purchase of June 4.

Required

Prepare journal entries to record the preceding transactions and events. (The company uses the perpetual inventory system. Round amounts to the nearest dollar.)

Check June 17, Dr. Cash $9,996