Question

The following are two independent situations. (a) On April 2, Maria Elston uses her JCPenney credit card to purchase merchandise from a JCPenney store for $1,600. On May 1, Elston is billed for the $1,600 amount due. Elston pays $500 on the balance due on May 3. Elston receives a bill dated June 1 for the amount due, including interest at 1% per month on the unpaid balance as of May 3. Prepare the entries on JCPenney Co.’s books related to the transactions that occurred on April 2, May 3, and June 1.

Answer 1

1. April 2

Dr Accounts Receivable $1,600

Cr Sales Revenue $1,600

2. May 3

Dr Cash $500

Cr Accounts Receivable $500

3. June 1

Dr Accounts Receivable $11

Cr Interest Revenue [(1,600-500)*1%] $11

Step-by-step explanation:

Preparation of the entries on JCPenney Co.’s books related to the transactions that occurred on April 2, May 3, and June 1.

1. April 2

Dr Accounts Receivable $1,600

Cr Sales Revenue $1,600

(Being To record the purchase of merchandise )

2. May 3

Dr Cash $500

Cr Accounts Receivable $500

(Being To record payment on the balance due )

3. June 1

Dr Accounts Receivable $11

Cr Interest Revenue [(1,600-500)*1%] $11

(Being to record Interest received )