Credit card sales Credit card is an electronic card, which allows the credit card holders to buy something on credit conveniently, and without paying immediate cash. Businesses allow customers to buy its products through bank credit cards, such sales are termed as credit card sales. For such convenience, bank charges some percentage as service charge expense on the total value of goods or services purchased on credit. Accounts receivable : Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business. Sale of receivables to a factor: Receivables can be liquidated by selling the receivables to a factor such as financial institutions or bankers by losing some percentage of receivables as fees (Service charge expense), before its maturity period. Factors will collect cash on receivables directly from the respective customers at its maturity. To prepare: The journal entry in the books of Restaurant T to record the acceptance of credit card payment upon sales.

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Answer 1

Question

Chapter 8, Problem 8.6BE

(a)

To determine

Credit card sales

Credit card is an electronic card, which allows the credit card holders to buy something on credit conveniently, and without paying immediate cash.

Businesses allow customers to buy its products through bank credit cards, such sales are termed as credit card sales. For such convenience, bank charges some percentage as service charge expense on the total value of goods or services purchased on credit.

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Sale of receivables to a factor:

Receivables can be liquidated by selling the receivables to a factor such as financial institutions or bankers by losing some percentage of receivables as fees (Service charge expense), before its maturity period. Factors will collect cash on receivables directly from the respective customers at its maturity.

To prepare: The journal entry in the books of Restaurant T to record the acceptance of credit card payment upon sales.

(b)

To determine

To prepare: The journal entry in the books of Company M to record the sale of accounts receivable.

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Students have asked these similar questions

Presented below are two independent transactions.a. Fiesta Restaurant accepted a Visa card in payment of a €175 lunch bill. The bank chargesa 4% fee. What entry should Fiesta make?b. St. Pierre Company sold its accounts receivable of €70,000. What entry should St. Pierremake, given a service charge of 3% on the amount of receivables sold?

If a company accepts credit cards, they must record the expense on their books. Please prepare the journal entries for the following scenario: Company A sells $480,000 on credit card sales. The credit card charges a 4.5% fee for the use of the card. The card company also deposits the cash into the company’s bank account the same night as the credit cards are accepted.

If the total Accounts Receivable of HAPPY ENTERPRISES is 560,000 and gives its customers a 5% discount if their accounts are settled within 10 days, the discount period. What amount of cash would be receive by the enterprise, supposing that it is a VAT paying business and that its customers were able to pay within the discount period.

Answer 2

Question

Chapter 8, Problem 8.6BE

(a)

To determine

Credit card sales

Credit card is an electronic card, which allows the credit card holders to buy something on credit conveniently, and without paying immediate cash.

Businesses allow customers to buy its products through bank credit cards, such sales are termed as credit card sales. For such convenience, bank charges some percentage as service charge expense on the total value of goods or services purchased on credit.

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Sale of receivables to a factor:

Receivables can be liquidated by selling the receivables to a factor such as financial institutions or bankers by losing some percentage of receivables as fees (Service charge expense), before its maturity period. Factors will collect cash on receivables directly from the respective customers at its maturity.

To prepare: The journal entry in the books of Restaurant T to record the acceptance of credit card payment upon sales.

(b)

To determine

To prepare: The journal entry in the books of Company M to record the sale of accounts receivable.

Expert Solution & Answer

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Answer 3

Question

Chapter 8, Problem 8.6BE

(a)

To determine

Credit card sales

Credit card is an electronic card, which allows the credit card holders to buy something on credit conveniently, and without paying immediate cash.

Businesses allow customers to buy its products through bank credit cards, such sales are termed as credit card sales. For such convenience, bank charges some percentage as service charge expense on the total value of goods or services purchased on credit.

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Sale of receivables to a factor:

Receivables can be liquidated by selling the receivables to a factor such as financial institutions or bankers by losing some percentage of receivables as fees (Service charge expense), before its maturity period. Factors will collect cash on receivables directly from the respective customers at its maturity.

To prepare: The journal entry in the books of Restaurant T to record the acceptance of credit card payment upon sales.

(b)

To determine

To prepare: The journal entry in the books of Company M to record the sale of accounts receivable.

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Answer 4

Question

Chapter 8, Problem 8.6BE

(a)

To determine

Credit card sales

Credit card is an electronic card, which allows the credit card holders to buy something on credit conveniently, and without paying immediate cash.

Businesses allow customers to buy its products through bank credit cards, such sales are termed as credit card sales. For such convenience, bank charges some percentage as service charge expense on the total value of goods or services purchased on credit.

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Sale of receivables to a factor:

Receivables can be liquidated by selling the receivables to a factor such as financial institutions or bankers by losing some percentage of receivables as fees (Service charge expense), before its maturity period. Factors will collect cash on receivables directly from the respective customers at its maturity.

To prepare: The journal entry in the books of Restaurant T to record the acceptance of credit card payment upon sales.

(b)

To determine

To prepare: The journal entry in the books of Company M to record the sale of accounts receivable.

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Answer 5

Chapter 8, Problem 8.6BE

(a)

To determine

Credit card sales

Credit card is an electronic card, which allows the credit card holders to buy something on credit conveniently, and without paying immediate cash.

Businesses allow customers to buy its products through bank credit cards, such sales are termed as credit card sales. For such convenience, bank charges some percentage as service charge expense on the total value of goods or services purchased on credit.

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Sale of receivables to a factor:

Receivables can be liquidated by selling the receivables to a factor such as financial institutions or bankers by losing some percentage of receivables as fees (Service charge expense), before its maturity period. Factors will collect cash on receivables directly from the respective customers at its maturity.

To prepare: The journal entry in the books of Restaurant T to record the acceptance of credit card payment upon sales.

(b)

To determine

To prepare: The journal entry in the books of Company M to record the sale of accounts receivable.

Answer 6

Chapter 8, Problem 8.6BE

(a)

To determine

Credit card sales

Credit card is an electronic card, which allows the credit card holders to buy something on credit conveniently, and without paying immediate cash.

Businesses allow customers to buy its products through bank credit cards, such sales are termed as credit card sales. For such convenience, bank charges some percentage as service charge expense on the total value of goods or services purchased on credit.

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Sale of receivables to a factor:

Receivables can be liquidated by selling the receivables to a factor such as financial institutions or bankers by losing some percentage of receivables as fees (Service charge expense), before its maturity period. Factors will collect cash on receivables directly from the respective customers at its maturity.

To prepare: The journal entry in the books of Restaurant T to record the acceptance of credit card payment upon sales.

Answer 7

Chapter 8, Problem 8.6BE

(a)

To determine

Credit card sales

Credit card is an electronic card, which allows the credit card holders to buy something on credit conveniently, and without paying immediate cash.

Businesses allow customers to buy its products through bank credit cards, such sales are termed as credit card sales. For such convenience, bank charges some percentage as service charge expense on the total value of goods or services purchased on credit.

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Sale of receivables to a factor:

Receivables can be liquidated by selling the receivables to a factor such as financial institutions or bankers by losing some percentage of receivables as fees (Service charge expense), before its maturity period. Factors will collect cash on receivables directly from the respective customers at its maturity.

To prepare: The journal entry in the books of Restaurant T to record the acceptance of credit card payment upon sales.

Answer 8

(b)

To determine

To prepare: The journal entry in the books of Company M to record the sale of accounts receivable.

Answer 9

(b)

To determine

To prepare: The journal entry in the books of Company M to record the sale of accounts receivable.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 8 - What is the difference between an account...Ch. 8 - What are some common types of receivables other...Ch. 8 - What are the essential features of the allowance...Ch. 8 - Prob. 4Q Ch. 8 - Prob. 5Q Ch. 8 - Prob. 6Q Ch. 8 - Prob. 7Q Ch. 8 - Tawnya Dobbs, the vice president of sales for...Ch. 8 - Prob. 9Q Ch. 8 - Prob. 10Q

Solution Summary: The author explains that a credit card is an electronic card that allows customers to buy goods or services on credit without paying immediate cash.

Concept explainers

To prepare: The journal entry in the books of Company M to record the sale of accounts receivable.

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Chapter 8 Solutions