Question

Donaldson Company has the following accounts in its general ledger at July 31: Accounts Receivable $40,000 and Allowance for Doubtful Accounts $2,500. During August, the following transactions occurred.

Oct. 15 Sold $30,000 of accounts receivable to Fast Factors, Inc. who assesses a 3% finance charge.
25 Made sales of $900 on Visa credit cards. The credit card service charge is 2%.
Instructions
Journalize the transactions.

Answer 1

Answer and Explanation:

The journal entries are shown below:

On Oct 15

cash Dr $21,000

Service charge expense Dr (3% of $30,000) $9,000

To Account receivable $30,000

(being the cash is recorded)

On Oct 25

cash Dr $882

Service charge expense Dr (2% of $900) $18

To Sales $900

(being the cash is recorded)

These two entries should be recorded