Loose Leaf for Fundamental Accounting Principles
Loose Leaf for Fundamental Accounting Principles
23rd Edition
ISBN: 9781259687709
Author: John J Wild, Ken Shaw Accounting Professor, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
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Chapter 9, Problem 1APSA
To determine

Journal Entries:

Journal entries are used to record the transactions of an organization in a chronological order. Based on these journal entries, the amounts are posted to the relevant ledger accounts.

Accounting Rules for Journal Entries:

To increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains.

To decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains.

To prepare: Journal entries.

Expert Solution & Answer
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Explanation of Solution

The merchandise sold on credit:

Date Account Title and Explanation Post ref. Debit
($)
Credit
($)
June 4 Accounts Receivables   650  
  Sales     650
  (Record the credit sales)      

Table (1)

• Account receivable account is an asset account and it record an increase, hence it is debited.

• Sales account is a revenue account, it records an increase, and hence it is credited.

Cost of goods sold:

Date Account Title and Explanation Post ref. Debit
($)
Credit
($)
June 4 Cost of Goods Sold   400  
  Merchandise Inventory     400
  (Record cost of goods sold)      

Table (2)

• Cost of goods sold is an expense account, it records an increase, and hence it is debited.

• Merchandise inventory account is an asset account and it decreases, hence it is credited.

Sale of merchandise on credit:

Date Account Title and Explanation Post ref. Debit
($)
Credit
($)
June 5 Cash   6,693  
  Credit Card Expenses   207  
  Sales     6,900
  (Record credit card sales less 3% fee )      

Table (3)

• Cash account is an asset account and it record an increase, hence it is debited.

• Credit card expenses account is an expense account, it records an increase, and hence it is debited.

• Sales account is a revenue account, it records an increase, hence it is credited.

Cost of goods sold:

Date Account Title and Explanation Post ref. Debit
($)
Credit
($)
June 5 Cost of Goods Sold   4,200  
  Merchandise Inventory     4,200
  (Record cost of goods sold)      

Table (4)

• Cost of goods sold is an expense account, it records an increase, and hence it is debited.

• Merchandise inventory account is an asset account and it decreases, hence it is credited.

Sale of merchandise on credit:

Date Account Title and Explanation Post ref. Debit
($)
Credit
($)
June 6 Cash   5,733  
  Credit Card Expenses   117  
  Sales     5,850
  (Record credit card sales less 2% fee )      

Table (5)

• Cash account is an asset account and it record an increase, hence it is debited.

• Credit card expenses account is an expense account, it records an increase, and hence it is debited.

• Sales account is a revenue account, it records an increase, and hence it is credited.

Cost of goods sold:

Date Account Title and Explanation Post ref. Debit
($)
Credit
($)
June 6 Cost of Goods Sold   3,800  
  Merchandise Inventory     3,800
  (Record cost of goods sold)      

Table (6)

• Cost of goods sold is an expense account, it records an increase, and hence it is debited.

• Merchandise inventory account is an asset account and it decreases, hence it is credited.

Sale of merchandise on credit:

Date Account Title and Explanation Post ref. Debit
($)
Credit
($)
June 6 Cash   4,263  
  Credit Card Expenses   87  
  Sales     4,350
  (Record credit card sales less 2% fee )      

Table (7)

• Cash account is an asset account and it record an increase, hence it is debited.

• Credit card expenses account is an expense account, it records an increase, and hence it is debited.

• Sales account is a revenue account, it records an increase, and hence it is credited.

Cost of goods sold:

Date Account Title and Explanation Post ref. Debit
($)
Credit
($)
June 8 Cost of Goods Sold   2,900  
  Merchandise Inventory     2,900
  (Record cost of goods sold)      

Table (8)

• Cost of goods sold is an expense account, it records an increase, and hence it is debited.

• Merchandise inventory account is an asset account and it decreases, hence it is credited.

Write off an uncollectible account:

Date Account Title and Explanation Post ref. Debit
($)
Credit
($)
June 13 Allowance for Doubtful Accounts   429  
  Accounts Receivables     429
  (Write off an uncollectible accounts)      

Table (9)

• Allowance for doubtful account is a contra asset account and it reduces the accounts receivable account to its realizable value, hence it is debited.

• Account receivable account is an asset account and it record a decrease, hence it is credited.

Payment received from debtor:

Date Account Title and Explanation Post ref. Debit
($)
Credit
($)
June 18 Cash   650  
  Accounts Receivables     650
  (Write off an uncollectible accounts)      

Table (10)

• Cash account is an asset account and it record an increase, hence it is debited.

• Account receivable account is an asset account and it record a decrease, hence it is credited.

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