Question

Consider these transactions: (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (a) Ayayai Corp. accepted a Visa card in payment of a $2,400 lunch bill. The bank charges a 4% fee. What entry should Ayayai Corp. make? (b) Splish Brothers Inc. sold its accounts receivable of $59,400. What entry should Splish Brothers Inc. make, given a service charge of 4% on the amount of receivables sold?

Answer 1

Answer and Explanation:

No. Account titles and explanation Debit Credit

(a) Cash $2,304

Service Charge Expense($2,400 * 4%) $96

Sales Revenue $2,400

No. Account titles and explanation Debit Credit

(b) Cash $57,024

Service Charge Expense($59,400 * 4%) $2,376

Accounts Receivable $59,400